CAIE IGCSE Economics 2.9.1 Definition of Market Failure Questions
Practise Cambridge IGCSE Economics by defining market failure and explaining why market allocation may be inefficient.
- Syllabus
- 2027–2029
- Course
- Economics 0455
Exam points
- Define market failure as an inefficient allocation of resources by the market.
- Identify market failure as a reason for possible government intervention.
- Distinguish market failure from normal market adjustment and disequilibrium.
CAIE IGCSE Economics 2.9.1 Definition of Market Failure Questions question 1
[Maximum number: 2]
There is a high level of division of labour in the United Kingdom (UK) energy industry. Cold weather in early 2018 caused very high demand for energy and a change in its price. This led to a temporary shortage of energy for firms and households in the UK. Part of the change in price may have been the result of UK energy firms abusing their monopoly power. This would be an example of market failure.
Define market failure.
Define market failure.
Market failure is when the market mechanism / price mechanism / demand and supply (1) does not lead to an efficient allocation of resources (1).
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