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Market Failure · CAPE Economics Unit 1

79 past-paper questions on Market Failure, part of Market Structure, Market Failure and Intervention, from every CAPE Economics Unit 1 paper on Quelpr.

Practise Market Failure
  1. 9(a)2 marks· CAPE Economics Unit 1 · 2005 · Paper 1List TWO examples of public goods.
  2. 9(b)2 marks· CAPE Economics Unit 1 · 2005 · Paper 1Identify TWO key characteristics of public goods.
  3. 9(c)2 marks· CAPE Economics Unit 1 · 2005 · Paper 1Briefly describe ONE of the characteristics identified in part (b).
  4. 10(a)2 marks· CAPE Economics Unit 1 · 2005 · Paper 1Define the term 'externalities'.
  5. 10(b)2 marks· CAPE Economics Unit 1 · 2005 · Paper 1Provide ONE example of an external benefit (positive externality) and ONE example of an external cost (negative externality) that occurs in your country.
  6. 10(c)2 marks· CAPE Economics Unit 1 · 2005 · Paper 1Explain how each of the external benefits and costs named in part (b) leads to an inefficient allocation of resources.
  7. 15(b)4 marks· CAPE Economics Unit 1 · 2005 · Paper 1Classify the two described scenarios under the concepts of asymmetric information, moral hazard, or adverse selection.
  8. 3(d)(i)6 marks· CAPE Economics Unit 1 · 2005 · Paper 2Define the following terms: (a) Efficiency, (b) Consumer surplus, (c) Producer surplus.
  9. 4(a)2 marks· CAPE Economics Unit 1 · 2005 · Paper 2Define the term 'market failure'.
  10. 4(b)6 marks· CAPE Economics Unit 1 · 2005 · Paper 2'The price of oil is rising due to political instability in some oil-producing countries.' Explain why this is NOT an indication of market failure.
  11. 4(c)(i)8 marks· CAPE Economics Unit 1 · 2005 · Paper 2Define monopolistic power and explain how it causes market failure.
  12. 4(c)(ii)8 marks· CAPE Economics Unit 1 · 2005 · Paper 2Define externalities and explain how they cause market failure.
  13. 4(c)(iii)8 marks· CAPE Economics Unit 1 · 2005 · Paper 2Define public good and explain how it causes market failure.
  14. 6(a)2 marks· CAPE Economics Unit 1 · 2005 · Paper 2Define the term 'social welfare'.
  15. 6(b)8 marks· CAPE Economics Unit 1 · 2005 · Paper 2List FOUR services that governments in the region provide for their citizens free of charge OR at below cost.
  16. 6(c)(iii)5 marks· CAPE Economics Unit 1 · 2005 · Paper 2Discuss how beneficial externality influences governments' decision to provide the welfare services listed in (b).
  17. 6(d)(i)5 marks· CAPE Economics Unit 1 · 2005 · Paper 2Define asymmetric information and give an example.
  18. 6(d)(ii)5 marks· CAPE Economics Unit 1 · 2005 · Paper 2Define moral hazard and give an example.
  19. 6(d)(iii)5 marks· CAPE Economics Unit 1 · 2005 · Paper 2Define adverse selection and give an example.
  20. 9(a)2 marks· CAPE Economics Unit 1 · 2006 · Paper 1Define the term 'market failure'.
  21. 9(b)2 marks· CAPE Economics Unit 1 · 2006 · Paper 1State TWO factors that account for market failure.
  22. 10(c)2 marks· CAPE Economics Unit 1 · 2006 · Paper 1Explain why a good with positive externality should be subsidised.
  23. 15(a)(i)2 marks· CAPE Economics Unit 1 · 2006 · Paper 1Explain the term 'moral hazards'.
  24. 15(a)(ii)2 marks· CAPE Economics Unit 1 · 2006 · Paper 1Explain the term 'adverse selection'.
  25. 1(a)(ii)2 marks· CAPE Economics Unit 1 · 2006 · Paper 2Define 'Pareto efficiency'.
  26. 4(a)(i)5 marks· CAPE Economics Unit 1 · 2006 · Paper 2Public goods
  27. 4(a)(ii)5 marks· CAPE Economics Unit 1 · 2006 · Paper 2Externalities
  28. 4(a)(iii)4 marks· CAPE Economics Unit 1 · 2006 · Paper 2Asymmetric information
  29. 4(b)21 marks· CAPE Economics Unit 1 · 2006 · Paper 2Explain how each of the concepts listed in 4(a) causes a market to fail.
  30. 3(c)(i)5 marks· CAPE Economics Unit 1 · 2007 · Paper 2Define 'deadweight loss' and shade the region representing the deadweight loss of the cigarette tax on your diagram from (b)(i).
  31. 3(c)(ii)8 marks· CAPE Economics Unit 1 · 2007 · Paper 2Define consumer surplus and producer surplus, indicating on the diagram the lost consumer surplus and producer surplus.
  32. 4(a)8 marks· CAPE Economics Unit 1 · 2007 · Paper 2Discuss the concept of 'market failure' in relation to Pareto efficiency criteria.
  33. 4(b)20 marks· CAPE Economics Unit 1 · 2007 · Paper 2State four causes of market failure and explain how each leads to an inefficient market outcome in your country.
  34. 1(c)(i)a3 marks· CAPE Economics Unit 1 · 2008 · Paper 2Allocative Efficiency
  35. 1(c)(i)b3 marks· CAPE Economics Unit 1 · 2008 · Paper 2Production Efficiency
  36. 1(c)(ii)4 marks· CAPE Economics Unit 1 · 2008 · Paper 2Using the production possibilities frontier, illustrate the concepts of 'efficiency' and 'allocative efficiency'.
  37. 4(a)(i)12 marks· CAPE Economics Unit 1 · 2008 · Paper 2Public good
  38. 4(a)(ii)12 marks· CAPE Economics Unit 1 · 2008 · Paper 2Externalities
  39. 4(a)(iii)15 marks· CAPE Economics Unit 1 · 2008 · Paper 2Asymmetric information (moral hazard and adverse selection)
  40. 4(b)(ii)3 marks· CAPE Economics Unit 1 · 2008 · Paper 2State why a natural monopoly uses resources inefficiently if unregulated.
  41. 4(a)21 marks· CAPE Economics Unit 1 · 2009 · Paper 2Select any three pairs from (i) Private cost and social cost, (ii) Merit good and public good, (iii) Positive externality and negative externality, and (iv) Adverse selection and moral hazard, and distinguish between…
  42. 4(b)(i)6 marks· CAPE Economics Unit 1 · 2009 · Paper 2Using suitable examples, explain how public goods cause market failure.
  43. 4(b)(ii)6 marks· CAPE Economics Unit 1 · 2009 · Paper 2Using suitable examples, explain how externalities cause market failure.
  44. 4(b)(iii)6 marks· CAPE Economics Unit 1 · 2009 · Paper 2Using suitable examples, explain how moral hazards cause market failure.
  45. 4(a)4 marks· CAPE Economics Unit 1 · 2010 · Paper 2Explain the term 'market failure' with special emphasis on the efficiency criterion.
  46. 4(b)(i)8 marks· CAPE Economics Unit 1 · 2010 · Paper 2Using suitable examples, explain how market failure is caused by public goods.
  47. 4(b)(ii)8 marks· CAPE Economics Unit 1 · 2010 · Paper 2Using suitable examples, explain how market failure is caused by monopolies.
  48. 4(a)(i)8 marks· CAPE Economics Unit 1 · 2011 · Paper 2With the use of examples, distinguish between private costs and social costs.
  49. 4(a)(ii)8 marks· CAPE Economics Unit 1 · 2011 · Paper 2With the use of examples, distinguish between public goods and private goods.
  50. 4(a)(i)2 marks· CAPE Economics Unit 1 · 2012 · Paper 2Define 'economic efficiency'.
  51. 4(a)(ii)2 marks· CAPE Economics Unit 1 · 2012 · Paper 2Define 'market failure'.
  52. 4(b)(i)4 marks· CAPE Economics Unit 1 · 2012 · Paper 2Distinguish between 'private benefits' and 'social benefits'.
  53. 4(b)(ii)1 mark· CAPE Economics Unit 1 · 2012 · Paper 2Explain how divergence between private benefits and social benefits leads to market failure.
  54. 4(c)(i)4 marks· CAPE Economics Unit 1 · 2012 · Paper 2Compare the characteristics of a 'public good' with those of a 'private good'.
  55. 4(c)(ii)2 marks· CAPE Economics Unit 1 · 2012 · Paper 2Explain how a public good may cause market failure.
  56. 4(d)8 marks· CAPE Economics Unit 1 · 2012 · Paper 2Draw a diagram illustrating 'deadweight loss' and use it to explain how a monopoly can cause market failure.
  57. 4(a)(i)4 marks· CAPE Economics Unit 1 · 2013 · Paper 2Explain the term economic efficiency.
  58. 4(a)(ii)4 marks· CAPE Economics Unit 1 · 2013 · Paper 2Explain the term market failure.
  59. 4(b)(i)4 marks· CAPE Economics Unit 1 · 2013 · Paper 2Explain how monopolies could lead to market failure.
  60. 4(b)(ii)6 marks· CAPE Economics Unit 1 · 2013 · Paper 2Explain how public goods could lead to market failure.
  61. 4(b)(iii)4 marks· CAPE Economics Unit 1 · 2013 · Paper 2Explain how negative externalities could lead to market failure.
  62. 4(a)(i)2 marks· CAPE Economics Unit 1 · 2014 · Paper 2Define the term 'public good'.
  63. 4(a)(ii)3 marks· CAPE Economics Unit 1 · 2014 · Paper 2Explain why public goods are usually provided by the government.
  64. 4(b)(i)2 marks· CAPE Economics Unit 1 · 2014 · Paper 2Define the term 'externality'.
  65. 4(b)(ii) a)4 marks· CAPE Economics Unit 1 · 2014 · Paper 2Copy the diagram provided into your answer booklet and label it to illustrate a negative production externality.
  66. 4(b)(ii) b)4 marks· CAPE Economics Unit 1 · 2014 · Paper 2Use the completed diagram to explain how negative externalities lead to market failure.
  67. 4(c)(i)1 mark· CAPE Economics Unit 1 · 2014 · Paper 2Identify the issue being described.
  68. 4(c)(ii)3 marks· CAPE Economics Unit 1 · 2014 · Paper 2Explain how the issue identified in (c)(i) leads to market failure.
  69. 2(b)(ii)4 marks· CAPE Economics Unit 1 · 2015 · Paper 2Analyse the total welfare effect (consumer surplus, producer surplus, government revenue, and deadweight loss) of the tax, referring to the diagram in (b)(i).
  70. 4(a)(i)2 marks· CAPE Economics Unit 1 · 2015 · Paper 2Define the term 'market failure'.
  71. 4(a)(ii)2 marks· CAPE Economics Unit 1 · 2015 · Paper 2Define the term 'Pareto efficiency'.
  72. 4(a)(iii)2 marks· CAPE Economics Unit 1 · 2015 · Paper 2Define the term 'productive efficiency'.
  73. 4(b)(ii)a)4 marks· CAPE Economics Unit 1 · 2015 · Paper 2Explain how public goods contribute to market failure, stating an example.
  74. 4(b)(ii)b)4 marks· CAPE Economics Unit 1 · 2015 · Paper 2Explain how merit goods contribute to market failure, stating an example.
  75. 4(d)(i)3 marks· CAPE Economics Unit 1 · 2016 · Paper 2Explain how market failure is caused by a monopolist.
  76. 2(c)8 marks· CAPE Economics Unit 1 · 2017 · Paper 2Discuss TWO reasons why the market for health care may fail if it was not subsidised by the government.
  77. 2(c)6 marks· CAPE Economics Unit 1 · 2018 · Paper 2With the aid of a well-labelled diagram, explain how negative externalities lead to market failure.
  78. 2(b)(i)4 marks· CAPE Economics Unit 1 · 2021 · Paper 2Distinguish between 'private benefits' and 'external benefits'.
  79. 2(b)(ii)5 marks· CAPE Economics Unit 1 · 2021 · Paper 2Explain what is meant by the term 'merit good' and state an example of a merit good.

Related topics in Market Structure, Market Failure and Intervention