Which combination of source, example, and policy in the table below is most likely to be consistent with correcting the identified market failure?
| Source of market failure | Example of market failure | Policy to correct market failure | |
|---|---|---|---|
| A | Public good | Traffic congestion | Congestion charging |
| B | Demerit good | Fresh fruit | Maximum price |
| C | Positive production externalities | Industrial research and development | Subsidies |
| D | Negative consumption externalities | Passive smoking | Tradeable pollution permits |
Row A
Row B
Row C
Row D
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.