A commercial laundry cleans hotel linen overnight. Table 1 shows the estimated costs created by one week of operation. Nearby households are not compensated for lost sleep.
| Cost | Value |
|---|---|
| Wages paid by the laundry | £4,800 |
| Water, electricity and detergent paid for by the laundry | £1,600 |
| Machinery repairs paid for by the laundry | £500 |
| Lost sleep experienced by nearby households | £900 |
Calculate the social cost of one week of the laundry's operation.
Explain why the laundry service may be over-provided by the market.
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.