Practise explaining non-rivalry, non-excludability and the free-rider problem, and why governments may provide public goods, using CAIE Economics AS questions.
With the use of examples, explain the difference between public goods and merit goods and consider whether markets will always provide enough of both goods.
Follow the point-based marking guidance at the top of this mark scheme and award:
up to 3 marks for AO1 Knowledge and understanding up to 3 marks for AO2 Analysis up to 2 marks for AO3 Evaluation.
AO1 Knowledge and Understanding (max 3 marks)
- For the use of accurate examples of BOTH merit goods and public goods (1).
- For clearly explaining the characteristics of public goods i.e., non-rivalry and non-excludable (1).
- For clearly explaining the characteristics of merit goods i.e., better than people realise and under consumed / underproduced due to information failure (1).
AO2 Analysis (max 3 marks)
- A market economy is less likely to produce enough of both goods due to the lack of a profit motive unless heavily subsidised.
- A mixed economy may produce enough due to government involvement and the welfare motive but may be constrained by limits on government spending.
Note: Analysis should consider at least 2 markets. If only 1 market is analysed, then 2 marks maximum for analysis and 0 for evaluation.
AO3 Evaluation (max 2 marks)
Offers a valid evaluation of whether enough of both types of good can be produced in at least 2 markets (1) reaching a valid conclusion (1).
AO1 Knowledge and understanding
AO2 Analysis
AO3 Evaluation