CAIE A-Level Economics 7.3.6 Reasons for Market Failure

Practise identifying market failure from externalities, imperfect information, monopoly power, non-excludability and socially undesirable allocation while excluding distribution…

Exam points

classify external effects, imperfect information, monopoly and non-excludability as failure sources
explain under-provision of socially desirable or public goods and overproduction of harmful goods
distinguish income inequality or a firm's private loss from inefficient market allocation

[Maximum number: 1]

What is not a source of market failure?

imperfect information

income inequality

monopoly

non-excludability

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7.3.6—Reasons for market failure question 1