Which of the following scenarios is the most direct illustration of government failure rather than a market failure?
The under-allocation of resources to primary healthcare due to consumers underestimating the long-term private benefits of inoculation
A regulatory body capping household water tariffs at a level that prevents water utilities from investing in infrastructure, leading to chronic water shortages and network decay
A steel manufacturer failing to account for the social costs of its air pollution, resulting in a deadweight loss to society
Private firms refusing to supply street lighting in urban areas due to the inability to prevent non-paying residents from using the service
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.