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6 marksMarket Failure

CAPE Economics Unit 1 · 2009 · Paper 2 · Question 4(b)(ii)

Using suitable examples, explain how externalities cause market failure.

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Other parts of this question

  1. 4(a)Select any three pairs from (i) Private cost and social cost, (ii) Merit good and public good, (iii) Positive externality and negative externality, and (iv)…[21 marks]
  2. 4(b)(i)Using suitable examples, explain how public goods cause market failure.[6 marks]
  3. 4(b)(iii)Using suitable examples, explain how moral hazards cause market failure.[6 marks]
  4. 4(c)Explain how governments can solve the problem caused by public goods.[11 marks]

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