A college runs evening literacy classes, and learners pay a fee to attend. Local firms later find that recruits who completed the classes need less training.
Which statement correctly describes the effect on local firms and its likely result?
A positive externality, so the fee already reflects the value of the classes to firms
A positive externality, so more people attend the classes than society would choose
A positive externality, so fewer people attend the classes than society would choose
A private benefit, so the number attending is the number society would choose
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.