AS Paper 1, June 2022Introduction to Markets and Market Failure
AS Paper 1, June 2022, Q4(b)
Which one of the following explains how market failure might occur in a free market economy?
Multiple choice1 mark
Context
A large number of people should be vaccinated against a new virus, so that even those who are not vaccinated will benefit.
AA net welfare loss results from intervention by the government
BFirms enter the market in response to higher prices
CGoods with positive externalities are underprovided
DPrices rise when there is excess demand