Rivermouth Council is deciding how to reduce waste from single-use takeaway containers. Table 1 shows annual estimates.
| Measure | Current estimate | With 40p charge |
|---|---|---|
| Single-use containers | 48 million | 31 million |
| Private production cost | £9.5 million | £7.1 million |
| External cost | £14.8 million | £8.1 million |
| Reusable-container uses | 6 million | 19 million |
[ITEM A] A twelve-week trial reduced single-use container purchases sharply. Litter collected near shopping streets also fell, and most large chains introduced reusable alternatives.
[ITEM B] Small takeaway businesses say new systems would raise administration costs. Some residents argue the charge would affect low-income customers most, especially where reusable options are unavailable.
Define the term 'market failure'.
Using Table 1, calculate the estimated annual social cost of single-use containers.
Explain two reasons why single-use containers may create negative externalities.
Using Table 1, analyse how a charge on single-use containers might reduce market failure.
Do you think Rivermouth Council should introduce the 40p charge on single-use takeaway containers? Use Items A and B and your own economic knowledge to justify your view.
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.