A-LevelEconomicsGovernment microeconomic intervention9708/42 · May/June 2019 · Q225 Marks

Explain what is meant by 'market failure' and consider how far government intervention can reduce market failure.

Explain what is meant by 'market failure' and consider how far government intervention can reduce market failure.[25]

Mark scheme

Marking points from the official mark scheme (May/June 2019). The mark or mark type is shown in brackets.

[25] Market failure explained in terms of lack of knowledge, externalities and inefficiency, (productive and allocative) public goods and their effect on price and output produced.
A discussion of the forms of government intervention regulation, state provision and taxation / subsidies and the degree to which they can reduce market failure. The limits of government knowledge limiting the beneficial outcome.
Note: merit and / or demerit goods are one form of market failure; positive and / or negative externalities are one form of market failure.

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Topic: Government microeconomic intervention, A-Level Economics (syllabus 9708). Structured question, 25 marks.
Source: A-Level Economics, May/June 2019 Paper 4 Variant 2, question 2.

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