The Student Room Group

Another Multiple Choice

Which one of the following is the best definition of government failure?

A) Government Intervention which leads to a loss of economic welfare.
B) Government failing to allocate resources efficiently.
C) Government failing to intervene with the market.
D) Government intervention which fails to have a positive effect on the economy.

I thought the answer was B, but my teacher said it was A. Can someone explain please?

My exam board is edexcel also, so I need an explanation worth 3 marks, not just the correct answer.

Thanks,
Sora
Original post by Sora
Which one of the following is the best definition of government failure?

A) Government Intervention which leads to a loss of economic welfare.
B) Government failing to allocate resources efficiently.
C) Government failing to intervene with the market.
D) Government intervention which fails to have a positive effect on the economy.

I thought the answer was B, but my teacher said it was A. Can someone explain please?

My exam board is edexcel also, so I need an explanation worth 3 marks, not just the correct answer.

Thanks,
Sora


A) The government has made things worse. Its actions have caused a loss of welfare.

B) The situation could have been improved by government, but still be suboptimal. The government may have improved welfare compared to a free market, but welfare is still not maximized.
(edited 11 years ago)
Reply 2
Much appreciated.

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