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

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Question 118

An increase in the price of residential electricity often results in households turning down their heating thermostats and using fewer high-energy appliances. This

A

is because electricity and home appliances are in joint supply.

B

shows that there is a positive cross elasticity of demand between the price of electricity and the demand for home appliances.

C

illustrates the operation of the rationing function of the price mechanism.

D

is because the price elasticity of demand for electricity is positive.

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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