AQA Econ 1 1.2

1.

What is a market economy? (If you find it easier write your answer on paper and compare your answer to the model answer)
2.

What is a command economy? (If you find it easier write your answer on paper and compare your answer to the model answer)
3.

What is the economic problem? (If you find it easier write your answer on paper and compare your answer to the model answer)
4.

Resources are…
- A.
  
  Unlimited
- B.
  
  Scarce
Correct Answer
B. Scarce

Explanation
Economies do not have unlimited resources. Instead resources are scarce. There is only so much that we can extract from the land. Labour supply in an economy is also limited by the population of a country. We cannot employ a work force above our population level.

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5.

Wants are…
- A.
  
  Unlimited
- B.
  
  Scarce
Correct Answer
A. Unlimited

Explanation
We assume that individuals are rational and that they would want to consume as many goods as possible. The consumption of goods and services provides individuals with utility. Utility is viewed as a ‘happiness‘ and individuals will want to become as happy as possible. Therefore they will want to consume as much as possible.

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6.

In the 1980’s the UK Economy’s mix…
- A.
  
  Stayed the same
- B.
  
  Moved towards a Command Economy
- C.
  
  Moved towards a Market Economy
Correct Answer
C. Moved towards a Market Economy

Explanation
Because of Margaret Thatcher’s policies during the 1980’s, the economy has moved more towards a market one. Margaret Thatcher chose to privatise some nationally owned companies and deregulate many markets.

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7.

Can an economy be a market economy?
- A.
  
  Yes
- B.
  
  No
Correct Answer
B. No

Explanation
Both a market economy and a command economy are theoretical. In reality an economy cannot be a market or a command one. Instead we look to see if the economy leans towards one or another.

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AQA Econ 1 1.2

What is a market economy? (If you find it easier write your answer on paper and compare your answer to the model answer)

What is a command economy? (If you find it easier write your answer on paper and compare your answer to the model answer)

What is the economic problem? (If you find it easier write your answer on paper and compare your answer to the model answer)

Resources are…

Wants are…

In the 1980’s the UK Economy’s mix…

Can an economy be a market economy?