CAIE A-Level Economics 7.3.5 Market failure
Practise recognising when markets misallocate resources because prices fail to reflect wider costs or benefits from an exchange.
- Syllabus
- 2026–2028
- Course
- Economics 9708
- Level
- A2
Exam points
- distinguish allocative inefficiency from productive efficiency in market scenarios
- recognise external costs or benefits that are missing from market prices
7.3.5—Market failure question 1
[Maximum number: 1]
What arises in situations where there are costs or benefits associated with a transaction that are not fully reflected in market prices?
A
allocative efficiency
B
allocative inefficiency
C
productive efficiency
D
productive inefficiency
B
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