Market failure and externalities

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• 1Which of the following is an example of a negative externality of production? A A firm's profits fall after a tax increase B Factory pollution damages the health of nearby residents C A firm's costs rise due to higher wages D Consumers switch to a cheaper substitute productContent review pendingPaper 1 styleEasy1 marksNo calculator+
• 2Which good is best described as a public good, in the economic sense of being non-excludable and non-rivalrous? A Ice cream B A private car C A national street-lighting system D A haircutContent review pendingPaper 1 styleEasy1 marksNo calculator+
• 3A factory produces goods but also releases pollution that harms nearby residents. Analyse two ways a government could reduce this negative externality.Content review pendingPaper 2 styleMedium4 marksNo calculator+
• 4Discuss whether taxing a negative externality is likely to be more effective than banning the activity outright.Content review pendingPaper 2 styleMedium4 marksNo calculator+