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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

Understanding market failure is essential for effective economic policy.

Description

Market Failure Factors

Market failure can arise from various factors including public goods, merit and demerit goods, externalities, monopoly power, and factor immobility. Each of these factors can lead to inefficiencies in the market.

  1. a

    Explain two factors that lead to market failure and provide examples for each

    Aim for approximately 4 distinct marking points.

    [4]

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Paper 2 structured question: Market failure

Paper 2Structured Questions1 marks

Description

Factors Leading to Market Failure

Market failure occurs when the allocation of goods and services is not efficient. Key factors include public goods, merit and demerit goods, external costs and benefits, monopoly power abuse, and factor immobility.

  1. a

    State one factor that leads to market failure

    Aim for approximately 1 distinct marking point.

    [1]