The government introduces a charge on an industrial solvent used by factories. Nearby residents are harmed when solvent enters a river.
| Before the charge | After the charge | |
|---|---|---|
| Price per litre | £2.00 | £2.40 |
| Monthly quantity bought by factories | 10,000 litres | 8,500 litres |
Using the data, explain how the policy could reduce the negative externality.
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.