A manufacturer is deciding whether to use its research team to develop a new production technology. Table 1 shows forecasts for the three years after the decision.
| Forecast for the three-year period | Value |
|---|---|
| Private benefit to the manufacturer | £4.6 million |
| Benefit to other firms that learn from the technology without paying | £3.9 million |
| Private cost to the manufacturer of research and development | £5.2 million |
| Cost to nearby residents of noise from testing the new equipment | £0.5 million |
Using Table 1, assess whether leaving this decision to the manufacturer is likely to result in an efficient allocation of resources.
83 exam-style questions on AQA GCSE Economics 1.6 Market failure, covering 1.6.1a Market failure as misallocation of resources, 1.6.1b Government intervention, 1.6.2a Defining externalities, and 1.6.2b Positive and negative externalities. Each one has a worked solution and a mark scheme showing where the marks go.