In this Unit of AS/A Levels Economics, the following topics will be considered: 

For both AS and A Levels

• Externalities
• Social costs as the sum of private costs and external costs
• Social benefits as the sum of private benefits and external benefits
• Decision making using cost-benefit analysis
• Private goods and public goods
• Merit goods and demerit goods
• Government intervention via maximum price controls, price stabilisation, taxes, subsidies, direct provision of goods and services

For A Levels only

• Sources of market failure
• Meaning of deadweight losses
• Market imperfections – existence of monopolistic elements
• Objectives of government microeconomic policy: efficiency, equity
• Additional policies to correct market failure: regulation, Policies towards income and wealth redistribution, Effectiveness of government policies
• Privatisation