A subsidy is paid to firms producing home insulation. What is the intended effect?
Supply shifts right and consumption increases
Demand shifts left and price rises
Supply shifts left and output falls
The external benefit becomes an external cost
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.