Practise classifying free, private, public, merit and demerit goods through scarcity, rivalry, excludability and information failure, then connecting each type to allocation outcomes.
Which activity illustrates the consumption of a 'free' good?
a farmer using water taken from a river
a patient visiting a medical facility provided by a charity
a person breathing air in the countryside
a person eating their birthday cake given as a gift by a friend
C
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
Consumers do not use enough of a product to maximise their private benefit because they have imperfect information about the product.
How would an economist classify this product?
demerit good
free good
merit good
public good
C