Government intervention in markets

Extract C (lines 6–7) states: ‘An alternative would be to impose a maximum price for consumers, as both Sri Lanka and the Philippines have done’.

Using the data and your knowledge of economics, evaluate the view that imposing a maximum price for rice is the best way for a rice-importing nation, such as Nigeria, to ensure the affordability of a basic food for its citizens.

A government announces that, over a 10 year period, it plans to reduce the number of tradable pollution permits it issues each year.

Which one of the following is the most likely response from firms in industries affected by

After considering Extract D, and the original evidence in Extracts A, B and C, would you recommend that the Government continue to subsidise firms to encourage them to set up gigafactories to produce batteries in the UK?

Justify your recommendation.

Extract C (lines 14–16) states that ‘A maximum rent can help keep the cost of student accommodation lower than it would otherwise be, but risks some landlords withdrawing from the market’.

Using the data in the extracts and your knowledge of economics, discuss the advantages and disadvantages of policies the government might introduce to improve the market for student accommodation.

Evaluate the view that the consumption of unhealthy foods can best be reduced through the use of nudges and other techniques from behavioural economics.

Extract B (lines 20–21) states that ‘all vehicle owners should be forced to pay the full costs of their driving. This would incentivise people to consider using public transport, cycling or walking.’ Evaluate policies that could be used to reduce the environmental impact of all types of car.

Assess the view that high-speed Internet connection is a necessity for modern life and should be provided by the government, free of charge, to all households.

Evaluate the view that government failure means that government intervention in markets will rarely lead to an improvement in economic welfare.

Which one of the following is a reason why the extension of property rights is likely to reduce market failure?

Figure 6 represents the market for sugar in a country. It shows the demand (D) curve and two supply (S₁ and S₂) curves in the market for sugar before and after the imposition of an indirect tax on sugar.

According to Figure 6, which one of the following combinations: A, B, C, or D, is correct?

After considering Extract E, and the original evidence in Extracts A, B, C and D, which policies, if any, would you recommend that the UK government should introduce to ensure that it achieves its zero-emissions target by 2050. Justify your recommendation.

Extract C (lines 17–19) states: ‘Many environmental economists suggest that making firms pay for the costs of landfill associated with their products, or taxing raw material inputs, will be necessary to ensure a sustainable future for all.’

Using the extracts and your knowledge of economics, evaluate policies, if any, that governments in developed countries should pursue to reduce waste and encourage the recycling of waste products.

Extract F (lines 1–3) states: ‘There are aspects of market failure in the social care sector, though some argue that inappropriate government intervention and a lack of funding are the main reasons why the system is failing to deliver high quality care.’

Using the extracts and your knowledge of economics, assess policies that might be used to improve the provision of social care in the UK.

Explain how the imposition of a tax on a good or service affects both consumer surplus and producer surplus.

Discuss whether governments should consider increasing the regulation and taxation of technology firms which have acquired significant global monopoly power.

Which one of the following government policies is most likely to reduce market failure and

Figure 6 shows the marginal private and social benefit (MPB and MSB) curves and the marginal private and social cost (MPC and MSC) curves in the market for domestically produced solar panels. The initial market equilibrium is at E₁.

To correct the market failure, the government introduces a subsidy to domestic manufacturers of solar panels of £200 per unit produced. Which one of the following represents the total amount of subsidy payments made by the government in the first

answer correct to the nearest penny.

market failures

OR

Essay 2

Several loss-making retailers including Homebase, House of Fraser and Poundworld have had to decide whether to shut down operations or carry on while making losses. In contrast, the music-streaming firm Spotify was valued at $27 billion in 2018, despite never having made a profit in any year since it was founded. Spotify has been more focused on expanding market share.

After considering Extract E, and the original evidence in Extracts A, B, C and D, would you recommend that the Government should increase its spending on housing? Justify your recommendation.

Extract E (lines 14–16) states that ‘The market economy is not going to create the jobs by itself for those workers who are most affected by the change.’

Extract F (lines 4–5) states that ‘taxing productivity-enhancing tools like robots or machines makes no economic sense.’

Use the extracts and your own knowledge of economics to evaluate whether governments should allow markets to respond freely to the opportunities and challenges presented by technological progress, without any state intervention.

Assess the view that regulation is a better policy for dealing with the problem of air pollution than the allocation of property rights or taxation.

The diagram below shows the demand curve (D) and two supply curves (S₁ and S₂) in the market for renewable energy.

The renewable energy market is initially in equilibrium at a price of OH. The government then introduces a subsidy for renewable energy.

After the introduction of the subsidy, the total amount of money received by the producers from both consumers and the government is

Which one of the following provides a reason for government intervention in a market?

Extract F (lines 19–20) notes that ‘The UK Government recognises the need to raise aspirations and attainment for girls’.

Use the extracts and your knowledge of economics to evaluate the policies that government might use to reduce the gender pay gap.

Evaluate the view that imposing a tax is the most effective government policy for reducing the market failures arising from overconsumption of unhealthy food and drink.

The diagram below shows the marginal private and social benefit (MPB and MSB)

where there are positive externalities in production.

At the free market equilibrium, market failure occurs. Which one of the following is correct?

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