The table below shows potential sources of market failure in various domestic markets.
| Source of market failure | Example of market failure | Policy to correct market failure | |
|---|---|---|---|
| A | Public goods | Street lighting | Indirect taxation |
| B | Positive consumption externalities | Domestic insulation installations | Government subsidies |
| C | Demerit goods | Cycling equipment | Earmarked subsidies |
| D | Negative production externalities | Agricultural runoff | Maximum price |
Which combination of source, example, and policy is consistent with the market failure identified?
Combination A
Combination B
Combination C
Combination 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.