Thursday, October 25, 2007

Unit 2: Taxation as a way to reduce market failure: Rubbish collection

The BBC reports the government is having second thought about it's idea to tax those whofail to recycle rubbish

http://news.bbc.co.uk/1/hi/uk_politics/7060607.stm

a) What market failure is this taxation meant to reduce?
b) Using a diagram, explain how the tax would reduce the market failure
c) If the tax was introduced, discuss the extent to which you believe it would be successful

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