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Economics (AS & A Level) · Feb / March 2025 · Paper 32 · Question 2

9708Efficiency and market failure

What is an example of market failure?

  1. Aa firm incurring a loss by selling goods at prices below the average cost
  2. Ba guaranteed price that results in the accumulation of unsold stocks
  3. Clow income earners being unable to buy high-priced goods
  4. Dunder-provision of a socially desirable good

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Correct answer: D. under-provision of a socially desirable good

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