A drought causes a shortage of water. The market price is allowed to rise, encouraging firms to supply more bottled water and causing some households to reduce non-essential use. Low-income households spend a larger share of their income on water. Evaluate whether the market price is likely to allocate water resources efficiently.
30 exam-style questions on OCR GCSE Economics 2.4 Price, covering 2.4.1 Price and distribution of resources, 2.4.2 Equilibrium price and quantity, 2.4.3 Draw the interaction of demand and supply, 2.4.4 Analyse the interaction of demand and supply, 2.4.5 Role of markets in allocating resources, and 2.4.6 Market forces and equilibrium. Each one has a worked solution and a mark scheme showing where the marks go.