Developers of housing scheme spend money putting in roads

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a) Developers of a new housing scheme spend money putting in roads, lighting andclearing land surrounding the scheme.

(i) What kind ofmarket failure is this? Explain.

(ii) Why does market failure occur in this scenario? Explain.

(iii) Carefully explain the impact on the supply curve, the private benefit curve, the social benefit curve, the market equilibrium level of output and the efficient level of output.

[Diagram not required]

(iv) Suggest a government policy that would yield the efficient outcome.

Reference no: EM131376439

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