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1.8 The market mechanism, market failure and government intervention in markets

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Question 25

A local municipality implements two new infrastructure projects:

  • Project I: An automated street-lighting system installed along public highways.
  • Project II: A municipal Wi-Fi network where users must pay a subscription fee to receive an access password, and where high traffic during peak hours causes network congestion, reducing connection speeds for all active users.

Which of the following correctly classifies the economic characteristics of these two projects?

A

Project I is non-excludable and non-rival; Project II is excludable and rival.

B

Project I is non-excludable and rival; Project II is excludable and non-rival.

C

Project I is excludable and non-rival; Project II is non-excludable and rival.

D

Project I is excludable and rival; Project II is non-excludable and non-rival.

Markscheme

1.8 The market mechanism, market failure and government intervention in markets Questions

  1. A Level
  2. /Economics
  3. /1.8 The market mechanism, market failure and government intervention in markets

378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.

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