A firm develops a water-saving irrigation system. It pays the research costs and earns revenue from sales. Other farms adopt methods they learn from the system without paying the firm.
When assessing the benefits of developing the system, which measure is the social benefit?
the benefit to the firm together with the benefit to other farms that adopt the methods
the benefit to other farms that adopt the methods, but not the firm's benefit
the benefit to the firm together with the firm's research costs
the benefit to the firm and its sales revenue, but not the benefit to other farms
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.