O-LevelEconomicsThe allocation of resources2281/12 · Oct/Nov 2015 · Q81 Mark

A developer built some large houses in a rural area which poorer people could not afford. The houses destroyed an area of natural beauty. What type of market failure resulted from the development?

Aignoring external cost

Binequality of income

Clack of information

Dprice discrimination

✓ Correct answer

A: ignoring external cost

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Topic: The allocation of resources, O-Level Economics (syllabus 2281). Multiple choice, 1 mark.
Source: O-Level Economics, Oct/Nov 2015 Paper 1 Variant 2, question 8.

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