Economics (AS & A Level) · Oct / Nov 2023 · Paper 32 · Question 3
9708Private costs and benefits, externalities and social costs and benefits
Negative externalities, such as air pollution due to car emissions, can cause damage to people's health in cities. Which response is most likely to occur from this situation?
- Acar manufacturers will automatically bear any external costs
- Bmarket failure will be resolved when private costs equal external costs
- Cmost people will decide to use buses rather than cars
- Dsome form of government intervention to improve economic efficiency
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Correct answer: D. some form of government intervention to improve economic efficiency
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