A government scheme pays farmers £450 for every hectare of land they plant with trees. The trees provide cleaner air for nearby residents, who do not pay the farmers.
Explain how this payment may affect the area of land farmers plant with trees.
127 exam-style questions on OCR GCSE Economics 3.8 Limitations of markets, covering 3.8.1 Positive and negative externalities, 3.8.2 Policies to correct externalities, 3.8.3 Impact of externality policies, and 3.8.4 Costs and benefits of externality policies. Each one has a worked solution and a mark scheme showing where the marks go.