A manufacturer produces a solvent that creates harmful fumes for nearby residents. The government introduces a tax on each unit produced.
Table 1 shows the price paid by buyers and the quantity produced before and after the tax.
| Price paid by buyers (£ per unit) | Quantity produced (units per month) | |
|---|---|---|
| Before the tax | 4.00 | 12,000 |
| After the tax | 4.60 | 9,000 |
Using Table 1, explain how the tax could move the allocation of resources closer to what is best for society.
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.