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Cambridge IGCSE Economics practice

Paper 2 structured question: Market failure

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Market failure

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Paper 2Structured Questions4 marks

The effects of market failure on consumption patterns.

Description

Market Failure Effects

Market failure leads to the overconsumption of demerit goods and the underconsumption of merit goods, impacting overall welfare.

  1. a

    Explain how market failure leads to the overconsumption of demerit goods.

    Aim for approximately 4 distinct marking points.

    [4]

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Paper 2 structured question: Market failure

Paper 2Structured Questions1 marks

Description

Market Failure and Consumption

Market failure occurs when the allocation of goods and services is not efficient, leading to overconsumption of demerit goods and underconsumption of merit goods.

  1. a

    State the definition of a demerit good.

    Aim for approximately 1 distinct marking point.

    [1]