Economics Marking Scheme Error

[Sai TejaS]

Economics Paper -11, Winter 2012 -

18. Which is a type of market failure?
A a general increase in the price of hotel rooms in busy summer seasons
B an increase in house prices caused by easier borrowing for house buyers
C an increase in travel time caused by a road accident
D an increase in unsold goods because of a change in tastes

Marking Scheme says answer is Option 'C'. This is an error right.

 

[JanHng]

No, because A,B, & D are positive scenarios for the market, hence not market failure.
A: Busy summer season, higher prices to deter people from going to vacation.
B: Easier borrowing, is not a result of the market but I assume, is by government intervention through the money supply.
D: Unsold goods, is good as producers are being told that they're producing unwanted goods.

Therefore the only option left is C. Which could be because a car accident is considered a Negative Externality, i.e one person's carelessness, leads to the loss of other people's time.