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5 marksMarket Failure

CAPE Economics Unit 1 · 2005 · Paper 2 · Question 6(d)(iii)

Define adverse selection and give an example.

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Other parts of this question

  1. 6(a)Define the term 'social welfare'.[2 marks]
  2. 6(b)List FOUR services that governments in the region provide for their citizens free of charge OR at below cost.[8 marks]
  3. 6(c)(i)Discuss how vote getting influences governments' decision to provide the welfare services listed in (b).[5 marks]
  4. 6(c)(ii)Discuss how welfare equity influences governments' decision to provide the welfare services listed in (b).[5 marks]
  5. 6(c)(iii)Discuss how beneficial externality influences governments' decision to provide the welfare services listed in (b).[5 marks]
  6. 6(d)(i)Define asymmetric information and give an example.[5 marks]
  7. 6(d)(ii)Define moral hazard and give an example.[5 marks]
  8. 6(e)(i)Define the term 'minimum wage rate'.[2 marks]
  9. 6(e)(ii)Discuss TWO effects that the minimum wage rate may have on the welfare of workers.[8 marks]

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