A delivery company uses a diesel lorry to take furniture to a customer, who pays the company for the delivery. Exhaust fumes from the lorry cause breathing discomfort to pedestrians along the route.
Which statement best classifies the breathing discomfort caused by the lorry?
It is a private cost, because it is caused by the delivery company's own lorry
It is the social cost of the delivery, because it is a cost to society
It is a private cost to the customer, because the customer paid for the delivery
It is an external cost, because it falls on pedestrians who are not part of the sale
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.