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

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Question 83

The existence of positive externalities in consumption results in an inefficient allocation of resources. This is because at the free market level of output the

A

marginal social benefit is greater than the marginal social cost.

B

marginal private cost is greater than the marginal social cost.

C

marginal private benefit is greater than the marginal social benefit.

D

marginal social cost is greater than the marginal private benefit.

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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