1 markMarket Failure
CAPE Economics Unit 1 · 2012 · Paper 2 · Question 4(b)(ii)
Explain how divergence between private benefits and social benefits leads to market failure.
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Practise this questionOther parts of this question
- 4(a)(i)Define 'economic efficiency'.[2 marks]
- 4(a)(ii)Define 'market failure'.[2 marks]
- 4(b)(i)Distinguish between 'private benefits' and 'social benefits'.[4 marks]
- 4(c)(i)Compare the characteristics of a 'public good' with those of a 'private good'.[4 marks]
- 4(c)(ii)Explain how a public good may cause market failure.[2 marks]
- 4(c)(iii)Explain how the government may respond to the problem caused by public goods and externalities.[2 marks]
- 4(d)Draw a diagram illustrating 'deadweight loss' and use it to explain how a monopoly can cause market failure.[8 marks]
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