AQA Economics Market Failure Revision Notes
Master AQA Economics Market Failure using simple revision notes, key facts and practice questions — all generated by AI for your exam.
Market failure occurs when the allocation of goods and services by a free market is not efficient. This can lead to negative outcomes for society, such as overproduction or underproduction of certain goods.
Key Concepts
- 1Definition of market failure
- 2Types of market failure: public goods, externalities, information asymmetry, and monopolies
- 3Consequences of market failure on social welfare
- 4Government intervention as a solution to market failure
- 5Evaluation of the effectiveness of government intervention
Simple Explanation
Market failure happens when the market doesn't distribute resources efficiently, leading to problems like pollution or lack of public services. It means that some goods and services are either overproduced or underproduced, which can hurt society. To fix these issues, governments often step in to help correct the market's failures.
Memory Trick
“Remember 'P.E.I.M.' for Market Failure: Public goods, Externalities, Information asymmetry, and Monopolies.”
Flashcards
What is market failure?
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Exam Questions
Describe and explain the concept of market failure. [6 marks]
6 marksView mark scheme hint▾
Define market failure, identify types, and discuss consequences.
Explain how externalities can lead to market failure. [4 marks]
4 marksView mark scheme hint▾
Define externalities, provide examples, and discuss their impact.
What is meant by public goods? [2 marks]
2 marksView mark scheme hint▾
Define public goods and give an example.
Practice Quiz
What is a characteristic of public goods?
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