Cambridge International (CAIE) · 7 The price system and the microeconomy (A Level) · 7.3 Efficiency and market failure

Cambridge International (CAIE) Economics past paper questions: Efficiency and market failure

Every Cambridge International (CAIE) question on Efficiency and market failure from 2023 to 2025: 3 data response questions and 14 multiple choice questions. It covers 7.5 Types of cost, revenue and profit, short-run and long-run production, 7.4 Private costs and benefits, externalities and social costs and benefits, 8.1 Government policies to achieve efficient resource allocation and correct market failure, 7.6 Different market structures and 9.3 Employment and unemployment. Each question links to its paper, mark scheme and examiner report.

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Subtopics7.5 Types of cost, revenue and profit, short-run and long-run production 37.4 Private costs and benefits, externalities and social costs and benefits 28.1 Government policies to achieve efficient resource allocation and correct market failure 27.6 Different market structures 29.3 Employment and unemployment 1

Data response questions on efficiency and market failure

Multiple choice questions

  1. A-level Paper 3, November 2025, Q1

    What is the definition of moral hazard?

  2. A-level Paper 3, November 2025, Q8

    What might help achieve allocative efficiency?

  3. A-level Paper 3, June 2025, Q2

    When is allocative efficiency achieved?

  4. A-level Paper 3, June 2025, Q4

    When might a moral hazard occur?

  5. A-level Paper 3, March 2025, Q2

    What is an example of market failure?

  6. A-level Paper 3, March 2025, Q6

    The diagram shows the private and social costs and benefits of production in a free market that result in market failure. Which change in output would be necessary to overcome this market failure?

  7. A-level Paper 3, March 2025, Q7

    A profit-maximising monopoly makes an abnormal profit and decides to reinvest some of this profit to improve its capital stock. What are the most likely outcomes from this change?

  8. A-level Paper 3, June 2024, Q7

    The diagram shows the costs and benefits of producing steel in a free market. Which area measures the deadweight loss of economic welfare?

  9. A-level Paper 3, November 2023, Q8

    What is not an example of a moral hazard?

  10. A-level Paper 3, June 2023, Q1

    Studies show that some dentists replace patients’ teeth more often than is necessary. Which factor helps to explain why excessive dental treatment may take place?

  11. A-level Paper 3, June 2023, Q7

    What can be done to help to overcome moral hazard?

  12. A-level Paper 3, June 2023, Q9

    A privately owned sole supplier of gas operates in an unregulated market with high barriers to entry and exit. Which row is most likely to indicate the economic efficiency resulting from the firm’s position in this market?

  13. A-level Paper 3, March 2023, Q4

    What is likely to help create dynamic efficiency?

  14. A-level Paper 3, March 2023, Q10

    If the marginal cost of a good is lower than its price, allocative efficiency has not been achieved. What is likely to remedy this situation?

Question text is quoted from the question papers, © Cambridge University Press & Assessment (UCLES), for students’ private study. Open the official papers and mark schemes from the links on each question. Examiner insights are written with AI assistance and moderated by Finn.