Government intervention in a market economy is most likely to lead to a more efficient allocation of resources if
the market price of a fashion item falls because of a shift in consumer preferences.
the consumption of a resource-intensive good generates significant negative externalities that are ignored by the pricing system.
firms increase their selling prices following an increase in the cost of imported raw materials.
agricultural producers lower their prices in response to an exceptionally large seasonal harvest.
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.