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AS & A Level · AS/A Level

Economics

Externalities and public goods

Name: ____________________Date: October 10, 2026
  1. 1.

    Fictional case: a factory's smoke damages neighbours' laundry without compensation. Explain why this is a negative production externality.

    [2 marks] · no calculator
  2. 2.

    Explain why a warning siren audible to an entire town may be underprovided by voluntary payments.

    [3 marks] · no calculator
  3. 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.

    [4 marks]
  4. 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.

    [4 marks] · no calculator
  5. 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.

    [4 marks] · no calculator
  6. 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.

    [4 marks] · no calculator

Original, unofficial practice questions from SubjectScout — not official past-paper questions.

Marking points are indicative, not an official mark scheme. Accept equivalent valid methods and supported interpretations that address the task; award each mark once without requiring the model wording.