In recent years, the consumption of single-use disposable vapes has spiked dramatically, particularly among younger demographics. While consumers enjoy the immediate convenience and nicotine delivery, they rarely account for the external costs of their consumption. When discarded, these devices leak heavy metals and lithium battery acid into local ecosystems, presenting significant biohazards and fire risks at waste treatment plants—costs that are not borne by the individual consumer.
Consequently, disposable vapes are overconsumed, leading to a misallocation of resources and market failure. Environmental economists suggest introducing a strict deposit-return scheme or outright banning disposable units to internalise these spillovers. However, manufacturers argue that heavy regulation will fuel an unregulated black market, resulting in government failure, and assert that the price mechanism should be left to allocate resources freely.
Define the term 'external costs' (Extract C, line 4).
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.