A-LevelEconomicsThe price system and the microeconomy9708/31 · May/June 2020 · Q141 Mark
A chemical firm produces toxic fumes that impose costs on society. The diagram shows the free market equilibrium of the firm's product at P1Q1. The government imposes a tax on the firm of XY.
- (a)How would this improve resource allocation? A It will internalise the external benefit. B It will internalise the external cost. C It will internalise the private benefit. D It will internalise the private cost.[1]
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Mark scheme
Marking points from the official mark scheme (May/June 2020). The mark or mark type is shown in brackets.
- [1] B
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