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

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Question 30

Market failure is most likely to occur when

prices rise to eliminate a shortage of a merit good.

the marginal social cost of production exceeds the marginal private cost, with no compensation paid to third parties.

firms experience diseconomies of scale as they expand output.

a firm shuts down because it is unable to cover its variable costs in the short run.

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