CAIE A-Level Economics 1.6.2 Public Goods

Practise identifying public goods through non-rivalry and non-excludability and explaining free-rider under-provision, while evaluating borderline examples and technological…

[Maximum number: 4]

In 2019, Russia set an aim to quicken its economic expansion - to grow faster than the world as a whole. So far, the plan is off to an uncertain start.

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This has also led to a fall in the value of the exchange rate for the Russian currency, the rouble.

$Table 1.1: Russia: Government budget balance as \% of national output$

Table 1.1: Russia: Government budget balance as \% of national output

Fig. 1.1: Russia's annual inflation rate, March 2015 to March 2020

Source: Trading Economics/Ministry of Finance of the Russian Federation

Explain whether school lunches provided free-of-charge by the Russian government would be classified as private goods or public goods.

For clear and accurate understanding of what is meant by the term excludable / non excludable (1 mark) For clear and accurate understanding of what is meant by the term rivalry / non rivalry in consumption
For a correct application of both terms to free school meals $\quad \begin{aligned} & (\mathbf{1} \text { mark }) & (\mathbf{1} \text { mark })\end{aligned}$ For a correct application of both terms to free school meals (1 mark) Leading to a conclusion that free school meals must be private and not public goods (1 mark)

4

Candidates should demonstrate clear understanding of how public and private goods are distinguished by reference to the terms (non)excludability and (non) rivalry but for the first two marks this does not need to be correctly applied to free school meals.

The final two marks may only be awarded if the terms are correctly applied to free school meals. The conclusion must be based on fully accurate application.

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1.6.2—Public goods question 1