The table below shows the private and external costs for four products, along with their market prices.
| Product | Private cost per unit of output (£) | External cost per unit of output (£) | Market price (£) |
|---|---|---|---|
| Product W | 15 | 3 | 18 |
| Product X | 20 | 10 | 22 |
| Product Y | 25 | 12 | 31 |
| Product Z | 30 | 15 | 42 |
Which product, W, X, Y or Z, has a market price which takes least account of its negative externalities?
Product W
Product X
Product Y
Product Z
378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.