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WalesEconomicsQuick questions
Introduction to Economic Principles (AS Unit 1)
Quick questions on Government intervention and government failure - WJEC A-Level Economics
3short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is government failure?Show answer
Government failure has several causes. Imperfect information means governments cannot know the exact external cost, so taxes and subsidies are set at the wrong level. Unintended consequences arise, such as black markets and shortages from a maximum price, or surpluses and waste from a minimum price. Administrative and enforcement costs can be large and may outweigh the welfare gain.
What is q1?Show answer
State two tools a government can use to correct market failure. [2 marks]
What is q2?Show answer
Explain one cause of government failure. [3 marks]
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