Economics (AS & A Level) · Feb / March 2025 · Paper 32 · Question 8
9708Government policies to achieve efficient resource allocation and correct market failure
What is not an example of government failure?
- Adecreased maximum price causing producers to leave the market
- Bhigher guaranteed price encouraging suppliers to overproduce
- Cincreased minimum wage leading to employers dismissing workers
- Dincreased subsidies encouraging the consumption of a socially desirable product
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Correct answer: D. increased subsidies encouraging the consumption of a socially desirable product
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