Economics (AS & A Level) · Oct / Nov 2022 · Paper 31 · Question 29
9708Government policies to achieve efficient resource allocation and correct market failure
A government wishes to increase economic efficiency in the country. It raises the rate of income tax which leads to the emigration of high-earning skilled workers that the country needs. How would this outcome be described?
- Agovernment failure: no; market failure: no; negative externality: yes
- Bgovernment failure: no; market failure: yes; negative externality: no
- Cgovernment failure: yes; market failure: yes; negative externality: no
- Dgovernment failure: yes; market failure: no; negative externality: no
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Correct answer: D. government failure: yes; market failure: no; negative externality: no
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