O-LevelEconomicsThe allocation of resources2281/11 · May/June 2023 · Q81 Mark

For some illnesses, wearing a face mask has a benefit as it could prevent people from getting infected. Not all people are willing to wear face masks. Based on the statement above, why would there be an inefficient allocation of face masks in the free market?

AConsumers in the free market only consider private costs and benefits.

BFace masks are non-rival and non-excludable.

CThere is abuse of monopoly power by the producer of face masks.

DThere is perfect information in the free market.

✓ Correct answer

A: Consumers in the free market only consider private costs and benefits.

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Topic: The allocation of resources, O-Level Economics (syllabus 2281). Multiple choice, 1 mark.
Source: O-Level Economics, May/June 2023 Paper 1 Variant 1, question 8.

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