Westford Council is considering a grant of £12,000 towards each technology project completed by a small firm. Each project costs £50,000 before any grant. The new production methods can be used by other firms and suppliers without payment. Table 1 shows annual estimates.
| Measure | Before the grant | With the grant |
|---|---|---|
| Net cost paid by a firm for one project, after any grant | £50,000 | £38,000 |
| Projects completed by small firms | 120 | 180 |
| Estimated annual benefit received by other firms and suppliers | £2.4 million | £3.6 million |
Analyse, with reference to Table 1, why the proposed grant could improve the 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.