The table below shows potential sources of market failure in various domestic markets, alongside examples and corrective policies.
| Row | Source of market failure | Example of market failure | Policy to correct market failure |
|---|---|---|---|
| A | Positive consumption externalities | National defense systems | Indirect taxation |
| B | Negative production externalities | Carbon emissions from coal power plants | Tradable pollution permits |
| C | Demerit goods | Domestic solar panel installations | Government subsidies |
| D | Public goods | Flood defence barriers | Maximum price controls |
Which combination of source, example, and policy is economically consistent?
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.