Gardeners keep buying a chemical lawn treatment even though an indirect tax has raised its price. Many of them do not realise that runoff from treated lawns damages a nearby stream used by anglers. Which policy would deal with the cause of this continued over-consumption?
A subsidy that lowers the cost of supplying each treatment
A compulsory label explaining how runoff from the treatment harms stream users
A legal ban on applying the treatment in gardens beside streams
A further increase in the indirect tax charged on each treatment
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.