Research and development (R&D) into green technologies by private engineering firms in a free market economy may be underprovided because some of the technical knowledge and expertise can be copied by competitor firms without paying for the R&D costs.
Which one of the following best describes this situation?
A negative production externality and a missing market
A negative production externality and partial market failure
A positive production externality and a missing market
A positive production externality and partial market failure
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.