O-LevelEconomicsThe allocation of resources2281/12 · May/June 2021 · Q61 Mark

Which problem will be reduced by a government subsidy to a firm?

Aabsence of a public good

Babuse of monopoly power

Coverconsumption of a demerit good

Dunderconsumption of a merit good

✓ Correct answer

D: underconsumption of a merit good

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Topic: The allocation of resources, O-Level Economics (syllabus 2281). Multiple choice, 1 mark.
Source: O-Level Economics, May/June 2021 Paper 1 Variant 2, question 6.

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