Allocation of Resources · 4 question types
Past paper frequency (2018 to 2024)
This topic accounts for approximately 11% of your exam marks.
Externalities and market failure corrective policies are increasingly tested; particularly in evaluate questions since 2020.
The IGCSE syllabus also mentions two further causes; both are covered in more detail in later topics.
When a single firm dominates a market, it can restrict output and raise prices to maximise its profit at the expense of consumers. This is socially inefficient. Governments often intervene through competition policy, price regulation or breaking up monopolies. Covered in topic 10.
Workers and capital cannot always move from declining industries to growing ones. When unemployed factors of production sit idle in one region while shortages exist in another, the market is failing to allocate resources efficiently. Governments respond with retraining schemes, relocation grants, infrastructure investment, and migration policy. Covered in topic 11 (and revisited in topic 14, unemployment).