Exam tip 1
If a question asks how a market 'responds' to an event, walk through the price mechanism in order: the shock changes demand or supply → price changes → producers and consumers react → resources are reallocated.
2281 · 2.1
The market system — common mistakes
Common exam mistakes on 2281 The market system. Learn what loses marks, then practise the topic with Examiner’s Ink.
Exam tip 2
Keep 'market' (a place where a product is traded) and 'market economy' (a whole system that relies on markets) distinct. Paper 1 likes to test the difference with a definition question.
Does a market have to be a physical place?
No. A market is any arrangement that lets buyers and sellers trade. Online shopping, currency trading and the job market are all markets without a single location.
Is a question about the price of petrol micro or macro?
Microeconomics, because it concerns one product market. A question about the overall rate of inflation, which petrol prices feed into, is macroeconomics.
Why are there no pure market or pure planned economies?
Every government provides some goods (defence, law courts) and regulates some markets, and even the most planned economies have some private trading. The useful distinction is how far each economy leans towards markets or planning.