Business-friendly fiscal policy in the United States (US) has encouraged firms to produce more. The US government has also encouraged mergers, including firms in the gas and electricity industries. Even though there are significant regulations, entrepreneurs have found that mergers enable them to maximise their profits. However, this may make markets less competitive and some states have imposed a maximum price for gas and electricity. Discuss whether or not maximum prices are beneficial.

Economics

IGCSE&ALevel

CAIE

Exam No：0455_s20_qp_23 Year：2020 Question No：4(d)

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2.10.2 causes of market failure ：The implications of misallocation of resources in respect of the over consumption of demerit goods and goods with external costs, and the under consumption of merit goods and goods with external benefits.

2.10.3 consequences of market failure：The implications of misallocation of resources in respect of the over consumption of demerit goods and goods with external costs, and the under consumption of merit goods and goods with external benefits.

2.11.2 government intervention to address market failure

2.5.2 market disequilibrium; Definition, drawing and interpretation of demand and supply schedules and curves used to identify disequilibrium prices and shortages (demand exceeding supply) and surpluses (supply exceeding demand).

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