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Edexcel A-Level Economics AS 1.3.4 3a Rationing Incentive and Signalling Functions of the Price Price Mechanism Mechanism Questions

Practise distinguishing how price rises ration scarce goods among consumers and create profit incentives for producers to adjust supply.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
AS

Exam points

  • explain how a price rise rations a scarce good by contracting demand or ability to buy
  • explain how a higher price and profit incentive encourage supply or resource reallocation

Edexcel A-Level Economics AS 1.3.4 3a Rationing Incentive and Signalling Functions of the Price Price Mechanism Mechanism Questions question 1

[Maximum number: 1]

Which one of the following is a function of the price mechanism?

A

An increase in the price of hand sanitisers, caused by an increase in demand, will ration them to those who are most able to pay

B

A decrease in the price of carrots, caused by excess supply, provides farmers with the incentive to increase supply

C

A decrease in the price of tinned meat is a signal to producers that demand for it is increasing

D

An increase in the price of petrol is a signal to the government to impose a maximum price

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