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

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Question 104

"Soft drink manufacturers are mandated by law to source an increasing proportion of their sugar from certified organic farms. Organic sugar producers charge a premium for their sugar due to the restricted supply of organically farmed land."

It can be deduced from the text above that:

A

the government directly subsidizes the organic sugar farmers to encourage production.

B

the social benefit of consuming organic sugar is lower than the private benefits to consumers.

C

the government is imposing a tariff on imported non-organic sugar to protect local organic farmers.

D

soft drink manufacturers are experiencing an increase in the average cost of sugar because a portion of their supply must be sourced from higher-priced organic farms.

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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