This article picked by a teacher with suggested questions is part of the Financial Times free schools access programme. Details/registration here. It is part of a special Climate Change for Schools report.

Specification:

  • Externalities

Click to read the article below and then answer the questions:

We must pay the cost of carbon if we are to cut it

  • Distinguish between market failure and government failure

  • With reference to the lemonade can, use a market failure diagram to analyse the deadweight welfare loss associated with a) a negative production externality; and b) a negative consumption externality

  • Which policies are often used by governments to reduce externalities?

  • Evaluate the effectiveness of a carbon tax

Gavin Clarke, Emmanuel College

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