Question 20N.1.SL.TZ0.1a
| Date | November 2020 | Marks available | [Maximum mark: 10] | Reference code | 20N.1.SL.TZ0.1a |
| Level | SL | Paper | 1 | Time zone | TZ0 |
| Command term | Explain | Question number | a | Adapted from | N/A |
Explain how production that causes pollution leads to market failure.
[10]
Marks should be allocated according to the paper 1 markbands for May 2013 forward, part A.
Answers may include:
- definition of market failure, negative production externalities
- diagram to show an over-allocation of resources where MSC is greater than MPC
- explanation that pollution causes a negative externality of production and over-production
- examples of where pollution leads to market failure.
NB Where a diagram showing negative externalities of consumption is used, a maximum of level 2 should be awarded.
This question was generally well answered with clear definitions of negative externalities and market failure and an effective explanation of how pollution leads to market failure. Most students supported their answers with an effective cost/benefit diagram that illustrated the market failure caused by negative externalities. The best answers included real world examples to illustrate the theory they used. A common error amongst weaker answers were poorly labelled diagrams.
