Bottled water sales in China were twice as high in 2015 as they had been in 2010. In 2013 China replaced the USA as the largest market for water by volume, although not by value because a bottle cost more in the USA. Rising global consumption of bottled water has enlarged the firms that make it, but it has also added to pollution.
(a)[2]
Why does pollution represent market failure?
(b)[4]
Explain two reasons why a supply curve might shift to the right.
(c)[6]
Analyse why a product may be priced higher in the USA than in China.
(d)[8]
Discuss whether consumers gain more from large firms or from small firms.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Pollution counts as an external cost” …