Lesson 1.2.1
1.2.1 Incentives and economic systems Quiz: OCR Economics, Unit 1
20 questions
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Lesson 1.2.1, Incentives and economic systems: 20 multiple choice questions for the OCR Economics (H460), Unit 1: Introduction to Microeconomics, written with Revision Ninja.
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The 20 questions
-
Which economist introduced the concept of the 'invisible hand' in free markets?
- Adam Smith
- John Maynard Keynes
- Friedrich Hayek
- Karl Marx
-
Which economic system is most strongly associated with the writings of Karl Marx?
- Mixed economy
- Command economy
- Laissez-faire economy
- Free market economy
-
According to Friedrich Hayek, what main advantage do free markets have over central planning?
- Zero market failure
- Equal wealth distribution
- Guaranteed full employment
- Efficient information processing
-
Which of the following is NOT a main function of the price mechanism?
- Signalling device
- Incentive device
- Rationing device
- Income redistribution
-
In a mixed economy, how are resources allocated between competing uses?
- Central planners only
- Markets and state
- Customs and traditions
- Market forces only
-
What does a rising price in a market signal to profit-maximising firms?
- Maintain current output
- Exit the market
- Increase supply
- Decrease supply
-
Which term describes consumer spending deciding what goods and services are produced?
- State rationing
- Price discrimination
- Consumer sovereignty
- Producer surplus
-
Which ownership structure is a defining feature of a pure command economy?
- Mutual ownership
- Corporate ownership
- Private ownership
- State ownership
-
If the government taxes sugary drinks, what primary economic incentive is created for consumers?
- Reduce consumption
- Increase consumption
- Switch to sugar
- Produce sugary drinks
-
A government sets production targets and fixed prices for all goods. What system is this?
- Free market economy
- Command economy
- Mixed economy
- Informal economy
-
When excess demand causes price to rise, which function limits consumer demand?
- Signalling function
- Rationing function
- Incentive function
- Allocative function
-
What primary incentive drives entrepreneurship in a free market economy?
- Public duty
- Social welfare
- State approval
- Profit motive
-
Why does the UK government directly provide healthcare alongside private medical markets?
- Eliminate private clinics
- Ban health insurance
- Correct market failure
- Maximise tax revenues
-
If a flood destroys coffee crops, how does the free market inform consumers to economise?
- Rationing coupons
- Public announcements
- Rising coffee prices
- Government quotas
-
A sudden rise in demand for electric cars causes prices to increase. What does this signal?
- High profitability
- Excess supply
- Falling production costs
- Market saturation
-
Which policy tool uses a financial penalty to disincentivise negative externalities?
- Price floor
- Production subsidy
- State provision
- Indirect tax
-
Which issue is a primary drawback uniquely characteristic of a pure free market economy?
- Central planning inefficiency
- Inequality of income
- Absence of competition
- Government bureaucracy
-
What force translates individual self-interest into beneficial societal outcomes in Smith's theory?
- State planning
- Central regulations
- Moral altruism
- Market competition
-
What structural issue frequently causes widespread shortages in command economies?
- Predatory pricing
- Excessive profit-seeking
- Consumer over-spending
- Price rigidities
-
Which term describes an unintended outcome where an economic incentive produces the opposite of the desired effect?
- Market failure
- Negative externality
- Perverse incentive
- Moral hazard
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