CAIE A-Level Economics A2 8.1.2 Government Failure Questions

Practise identifying unintended consequences, information limits and ineffective interventions that can produce government failure in A2 questions.

Syllabus
2026–2028
Course
Economics 9708
Level
A2

Exam points

  • Explain government failure, including unintended effects, information limits, slow responses and policies that worsen resource allocation.

CAIE A-Level Economics A2 8.1.2 Government Failure Questions question 1

[Maximum number: 1]

The government can use policies to try and reduce the environmental damage caused by the amount of rubbish (garbage) created by firms and households.

Which policy to reduce rubbish is most likely to lead to government failure?

A

an incentive payment for firms who reduce the levels of rubbish

B

a tax on the amount of rubbish a firm or household creates

C

an advertising campaign about the problems created by rubbish

D

government grants to firms researching how to safely dispose of rubbish

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