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

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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