A-LevelEconomicsThe price system and the microeconomy9708/12 · Oct/Nov 2011 · Q121 Mark

When demand for a good falls, its price falls. What is the function of the price fall?

Ato eliminate shortages

Bto reduce consumer surplus

Cto send a signal to producers

Dto stimulate a further fall in demand

✓ Correct answer

C: to send a signal to producers

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Topic: The price system and the microeconomy, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Oct/Nov 2011 Paper 1 Variant 2, question 12.

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