Quelpr
6 marksMarket Failure

CAPE Economics Unit 1 · 2005 · Paper 2 · Question 4(b)

'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.

The mark scheme is shown once you've answered.

Practise this question

Other parts of this question

  1. 4(a)Define the term 'market failure'.[2 marks]
  2. 4(c)(i)Define monopolistic power and explain how it causes market failure.[8 marks]
  3. 4(c)(ii)Define externalities and explain how they cause market failure.[8 marks]
  4. 4(c)(iii)Define public good and explain how it causes market failure.[8 marks]
  5. 4(d)(i)Explain how regulation can be used to remove the effects of monopoly power.[6 marks]
  6. 4(d)(ii)Explain how taxation or subsidy can be used to remove the effects of externalities.[6 marks]
  7. 4(d)(iii)Explain how government intervenes to ensure optimal production of public goods.[6 marks]

More practice: the rest of this paper · more Market Failure questions · all CAPE Economics Unit 1 past papers