AS & A Level / Economics / Externalities and public goods Question practice
Externalities and public goods About this practice Original, unofficial practice. Evaluative marking points are indicative: credit equivalent justified arguments, one point per distinct criterion, without double counting.
Accept equivalent valid methods and supported interpretations that address the task. Award each mark once; matching the model wording is not required.
Economics Externalities and public goods
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1 Fictional case: a factory's smoke damages neighbours' laundry without compensation. Explain why this is a negative production externality. Easy 2 marks No calculator + 2 Explain why a warning siren audible to an entire town may be underprovided by voluntary payments. Easy 3 marks No calculator + 3 Fictional model: marginal benefit is 100 - Q, marginal private cost is 20 + Q, and constant marginal external cost is 20, all in currency per unit. Calculate market and socially efficient quantities and the corrective per-unit tax in this model. Medium 4 marks Calculator + 4 Fictional case: insulation creates benefits for neighbours through lower local pollution. Explain why a subsidy may raise efficiency, and identify a reason it might fund activity that would occur anyway. Medium 4 marks No calculator + 5 Fictional case: Sena can tax industrial emissions or set a fixed emissions limit. Damage rises sharply above a known threshold, but firms' abatement costs are uncertain. Evaluate the choice. Hard 4 marks No calculator + 6 Fictional case: a park is free to enter but becomes crowded on weekends. Evaluate calling it a pure public good and the case for a weekend entry charge. Hard 4 marks No calculator + Self-assessed Not marked yet
Set total 21
This is a self-study tool, not a certified answer key or a predicted AS & A Level grade.
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Original questions, not official past papers. Marking guidance is indicative, not an official answer key. Check your exam-board specification.
