A pollution tax reduces emissions but raises firms' costs and product prices. Which evaluation is best?
The policy fails because prices rise
Environmental benefits may outweigh higher private costs, depending on the size of each effect
The tax creates a positive externality only for firms
Consumers and producers must both gain
31 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.