Context

Question 1

What are some real life examples of negative externalities In production?

Answer 1

1) Deforestation (carbon emissions in the Amazon releasing carbon emissions and destroying biodiversity)
2) Manufacturing (factories emit pollutants into air and water)
3) Driving cars (congestion and air pollution)

Question 2

Real life examples of negative externalities in consumption?

Answer 2

1) Cigarettes (cost NHS 2.4 billion £)
2) Alcohol (cost NHS 4.91 billion £) alcohol also leads to crime and so criminal justice service and social services cost up to 27.4 billion £

Question 3

Real life examples of positive externalities of consumption?

Answer 3

1) vaccination (in uk prevent around 3 million deaths a year)
2) public transport (a full double decker bus can take up to 75 cars off the road)
3) exercise

Question 4

Real life examples of positive externalities in production?

Answer 4

1) in work training
2) R and D

Question 5

What are real life examples of public goods?

Answer 5

1) Bridges
2) road signs
3) Flood defences
4) street lights
5) Defence

Question 6

What are real life examples of common access resources?

Answer 6

Seas, air, forests

Question 7

What are some real life examples of Indirect tax and market failure?

Answer 7

Cigarette tax (indirect VAT) over 80% of the price of a pack of cigarettes, saved NHS £2.4Bn

Question 8

What’s a real life examples of common of subsidy to solve market failure?

Answer 8

Uk government subsidises electric vehicles (up to £2500 off eligible electric cars)

Question 9

What is a real life examples of regulation to solve market failure?

Answer 9

London ultra low emission zone (ULEZ)reducing health costs linked to air pollution

Question 10

What are some real life examples of state provision

Answer 10

1) NHS
2) STATE SCHOOLS

Question 11

What is a real life example of tradable pollution permits?

Answer 11

The European Union Emissions Trading System (EU ETS) companies given a limit on the amount of carbon dioxide they can emit

Question 12

What is a real life example of a minimum price used to solve market failure?

Answer 12

Scotland 2018 minimum of 50p per unit of alcohol

Question 13

What is a real life example of a maximum price used to solve a market failure?

Answer 13

New York rent control (maximal base rent)

Question 14

Real life example of perfect competition?

Answer 14

Market stalls

Question 15

Real life example of highly competitive markets?

Answer 15

1) Fast food
2) cars

Question 16

Examples of monopolistic competition?

Answer 16

1) taxis
2) clothing
3) hairdressers