A region has a fixed amount of timber, machinery and labour available each year. Each school desk and garden screen uses the same amount of these resources. Table 1 compares the market output with the estimated output that would give society the greatest benefit from the resources available.
| Product | Market output per year | Output per year giving society the greatest benefit |
|---|---|---|
| School desks | 4,000 | 5,500 |
| Garden screens | 6,000 | 4,500 |
Which statement correctly interprets the allocation shown in Table 1?
The scarcity of timber, machinery and labour is itself the market failure.
Too few resources go to school desks and too many go to garden screens.
Too many resources go to school desks and too few go to garden screens.
There is no market failure because buyers and sellers continue to trade both products.
83 exam-style questions on AQA GCSE Economics 1.6 Market failure, covering 1.6.1a Market failure as misallocation of resources, 1.6.1b Government intervention, 1.6.2a Defining externalities, and 1.6.2b Positive and negative externalities. Each one has a worked solution and a mark scheme showing where the marks go.