Which one of the following is an appropriate form of government intervention to correct the specified market failure?
The imposition of a minimum price for a demerit good above its free market equilibrium price
The provision of a subsidy to reduce the consumption of a demerit good
The introduction of tradeable permits to encourage the consumption of merit goods
The imposition of a maximum price for a public good to prevent underprovision
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.