Explain why the use of petrol and diesel cars may be a source of market failure. [15]

• define market failure i.e. when free market forces of supply and demand fail to produce the quantities of goods and services at prices which reflect marginal utilities OR fails to operate at market equilibrium•petrol and diesel cars produce CO₂ which can be perceived as a negative externalityuse data as example of externality or own contextual knowledge •MSC and MPC diagram highlighting overproduction • discussion of government policy (rule of thumb: one supply side one demand side)supply side: R+D tax breaks; this is a form of intervention which uses market forces to internalise the externalitydemand side: congestion charge; demand diagram
higher level: evaluate congestion charge i.e inequitable and dependent on elasticity of demand