Economics (AS & A Level) · May / June 2023 · Paper 12 · Question 5

Price plays a number of functions in the allocation of resources. Which statement best illustrates the function that relies upon consumer choice (sometimes known as the incentivising function)?

1. AA price fall can show consumers that a good is becoming less popular.
2. BA price fall tends to persuade some producers not to stay in the market for the good.
3. CA price rise means consumers cannot afford to buy so much of a good.
4. DA price rise tends to reduce competitiveness in the market for a good.

As printed in the paper