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1.3 Market failure

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Question 29

Market Failure and Infrastructure

Statement A:

"The municipal authority invested £4.2 million in constructing a dedicated network of urban green corridors and pocket parks across the city center. Residents who visit these parks report improved mental well-being and higher physical activity levels."

Statement B:

"Because of the increased vegetation and tree canopy, urban ambient temperatures during summer heatwaves decreased by 2°C. This microclimate regulation benefited all local residents and businesses by lowering air conditioning costs. Furthermore, local medical practices reported a drop in heat-related emergency admissions among elderly residents who did not personally visit the parks."

With reference to the statements above, explain what is meant by external benefits.

[3]

1.3 Market failure Questions

  1. A Level
  2. /Economics
  3. /1.3 Market failure