Economics 0455 · IGCSE · Market failure

Market failure — practice question

An expanse of litter in the Pacific Ocean, known as the Great Pacific Garbage Patch, covers an area three times the size of France. It contains waste such as old fishing nets, although most of it is plastic waste. By 2050, it is predicted that there will be more plastic than fish in the Pacific Ocean. Several islands in the Pacific Ocean depend on fishing. More pollution will raise the social cost of the fishing industry.
(a)[2]

Identify the two categories of costs that make up social cost.

(b)[4]

Explain two causes of a rightward shift in the demand curve for fish.

(c)[6]

Analyse the ways in which removing pollution could benefit an economy.

(d)[8]

Discuss whether countries specialising benefits consumers.

Worked solution & mark scheme

This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: Private costs.

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