The table below shows potential market failures and policies in contemporary markets.
Which combination of source, example, and policy, A, B, C or D, is consistent with the identified market failure?
| Source of market failure | Example of market failure | Policy to correct market failure | |
|---|---|---|---|
| A | Demerit good | Cycling helmets | Indirect tax |
| B | Negative consumption externalities | Sugary soft drinks | Indirect tax |
| C | Public good | Public vaccination programmes | State provision |
| D | Positive consumption externalities | Domestic flights | Subsidy |
Demerit good / Cycling helmets / Indirect tax
Negative consumption externalities / Sugary soft drinks / Indirect tax
Public good / Public vaccination programmes / State provision
Positive consumption externalities / Domestic flights / Subsidy
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.