Economics 0455 · IGCSE · Market failure

Market failure — practice question

A private sector firm is awarded a contract by the government to provide a country’s water supply. Which government directive would minimise the risk of market failure?

  • Aallow the firm to ration water rather than meet demand
  • Bensure the firm’s supply includes all areas which are expensive to service
  • Cinsist that the firm aims to maximise profits
  • Dinstruct the firm to provide water only to those who can pay for it

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