Question 9
[Maximum number: 1]
What is the essential feature of nudge theory?
A
the aim of satisficing
B
the establishing of a legal requirement
C
the existence of a contestable market
D
the idea of persuasion
CAIE A-Level Economics 8.1.1 Policies for Market Failure
Practise applying indirect taxes, subsidies, controls, permits, regulation, provision and behavioural nudges to externalities, information failures and merit or demerit goods.
How this is tested
- choose a policy that targets the identified external cost, external benefit or information gap
- use PED, supply response or permit incentives to predict the change in consumption or pollution
- evaluate alternatives through targeting, administration, equity, fiscal cost and government failure