Accounting Multiple Choice Question – 7 July 2025

Intervention by the government to impose a limit on businesses’ carbon emissions is an example of regulation motivated by the wish to address market failure caused by?

Select ONE answer:

1. Asymmetric information
2. Equity
3. Market imperfection
4. Externalities

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct == > An externality is an adverse social consequence which the private producer has no incentive to minimise.

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