Cambridge IGCSE · Economics (0455)

Market economic system: Practice Questions

2 multiple-choice questions marked as you go, and 4 written questions with worked solutions. All on Market economic system.

6 questions14 marksFree, no account

Question 1

1 mark

Which of the following is a fundamental characteristic of a market economic system?

Question 2

1 mark

In a pure market economic system, how are resources primarily allocated?

Question 3

2 marks

Identify two potential disadvantages of a market economic system regarding the provision of certain types of goods.

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Question 4

3 marks

In a market economic system, explain how the profit motive influences the decision of 'what to produce'.

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Question 5

3 marks

Explain the concept of consumer sovereignty and its role as an advantage in a market economic system.

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Question 6

4 marks

A market economic system relies on the price mechanism to solve the basic economic problem of scarcity. In this system, resource allocation is determined by the interaction of buyers and sellers.

(a) Identify two key questions about resource allocation that all economic systems must answer.
(b) Explain how the price mechanism helps a market economy determine what to produce when consumer preferences change.
(c) Describe one advantage of a market economic system over a planned economic system.

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