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Economics (AS & A Level) · Feb / March 2024 · Paper 32 · Question 13

9708Government policies to achieve efficient resource allocation and correct market failure

What is a failure of government microeconomic intervention?

  1. AAn indirect tax equal to external costs is imposed on cigarettes and the demand falls.
  2. BLimits are placed on a trade union's restrictions that increase labour mobility.
  3. CPrice controls on bread are removed which allow a free market to operate.
  4. DTariffs are imposed on imported goods which cause the Gini coefficient to increase.

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Correct answer: D. Tariffs are imposed on imported goods which cause the Gini coefficient to increase.

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