Economics 2281 · O Level · Market failure

Market failure — practice question

The United Nations’ World Tourism Organisation estimates that by 2020, only 7% of the world’s population will have travelled to another country. A rise in international travel could generate employment and affect incomes. On the other hand, it would also place strain on limited resources and would produce external costs.
(a)[2]

Define what is meant by ‘resources’.

(b)[4]

Explain the ways in which international travel may create external costs.

(c)[6]

Analyse how an increase in international travel may affect incomes.

(d)[8]

Discuss whether demand for international travel is likely to keep rising.

Worked solution & mark scheme

This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: factors of production / inputs employed to produce goods and services

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