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SingaporeEconomicsQuick questions
Market Failure and Intervention
Quick questions on Government intervention tools for market failure explained: H2 Economics
4short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is tradable permits (for pollution)?Show answer
A government caps the total quantity of emissions and issues permits that firms can buy and sell. Firms that can cut emissions cheaply do so and sell their spare permits; firms facing high abatement costs buy permits. The cap guarantees the environmental target, and trading ensures it is met at least cost.
What is q1?Show answer
Explain how a Pigouvian tax corrects a negative externality. [3 marks]
What is q2?Show answer
State one advantage of tradable permits over a tax for cutting pollution. [2 marks]
What is q3?Show answer
Why must public goods be provided directly rather than subsidised? [2 marks]
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