Market failure

After considering Extract D, and the original evidence in Extracts A, B and C, would you recommend that the government intervene in the economy to try to reduce the differences in the economic prosperity of the various regions of the United Kingdom?

Justify your recommendation.

Unemployed workers in the south of a country are unable to take up jobs in the north of the country due to higher housing costs. This is an example of

Turn over for Section B

Which one of the following is most likely to result in complete market failure?

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.

Immobility of labour may lead to a misallocation of resources and market failure