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2 marksMarket Failure

CAPE Economics Unit 1 · 2005 · Paper 1 · Question 10(a)

Define the term 'externalities'.

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Other parts of this question

  1. 10(b)Provide ONE example of an external benefit (positive externality) and ONE example of an external cost (negative externality) that occurs in your country.[2 marks]
  2. 10(c)Explain how each of the external benefits and costs named in part (b) leads to an inefficient allocation of resources.[2 marks]

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