A small engineering firm develops a new production method. The project gives the firm a private benefit valued at £46,000 and creates an additional benefit of £14,000 for rival firms and suppliers that learn from the method without paying for the research.
Calculate the social benefit of the project and explain what this suggests about the amount of research undertaken 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.