Efficiency and Market Failure

With the help of a diagram, consider whether economic efficiency can be achieved without government intervention in a market economy.

Market failure is to blame for climate change and the inefficient allocation of resources. The only solution is for governments to intervene to improve resource allocation.

Assess the extent to which you agree with this statement.

The long-term equilibrium position in perfect competition is frequently used to illustrate efficient resource allocation in a free market economy.

Explain why this is so and consider what prevents efficiency from being achieved.

Market failure exists in all economies.

Evaluate, with the aid of a diagram(s), the meaning of market failure and two policies a government may use to correct market failure.

The long-term equilibrium position in perfect competition is frequently used to illustrate efficient resource allocation in a free market economy.

Explain why this is so and consider what prevents efficiency from being achieved.

Governments in many countries are promoting policies that reduce the impact of the negative externalities.

Evaluate, using appropriate diagram(s), the extent to which two policies used to reduce negative externalities can also improve allocative efficiency.

Privatisation is often required by the International Monetary Fund (IMF) and the World Bank before they are prepared to offer support to countries requiring loans, grants, debt relief and debt cancellation programs.

Evaluate the view that privatisation will always improve the allocation of resources in a country.

Some firms in oligopoly markets choose to collude rather than engage in price competition. This will lead to higher prices and a less efficient allocation of resources.

Evaluate this statement.

To improve allocative efficiency economists frequently advise governments to remove existing subsidies to the private sector providers of education.

With the help of a diagram, evaluate this advice.

To improve allocative efficiency economists frequently advise governments to remove existing subsidies to the private sector providers of education.

With the help of a diagram, evaluate this advice.