Question 1
Using real-world examples, discuss whether public goods should always be provided directly by the government.
Answers may include:
- Terminology: public good.
- Explanation: of why the government should directly provide public goods in terms of the advantages involved, such as overcoming the problem of the market not allocating resources to the production of public goods due to the features of non-excludability and non-rivalry, and the free rider problem;
the positive externalities associated with public goods;
the possible impact of extra government spending on AD and or LRAS.
- Diagram: no diagram is required for this question, although some candidates may choose to use a diagram related to the question.
- Synthesis (discuss): in terms of the possible reasons why the government should not directly provide public goods, such as the additional government spending involved and the problem of opportunity cost;
the problem of deciding which public goods should be provided and in what quantities;
the difficulty of estimating future benefits in any cost benefit analysis;
the possible benefits to be achieved by contracting out to the private sector.
- Examples: use of real-world examples of public goods being directly provided by the government with associated advantages or disadvantages.
N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.
Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.
Assessment Criteria
Marks
Level descriptor
0
- The work does not reach a standard described by the descriptors below.
1-3
- The response indicates little understanding of the specific demands of the question.
- Economic theory is stated but it is not relevant.
- Economic terms are stated but they are not relevant.
- The response contains no evidence of synthesis or evaluation.
- A real-world example(s) is identified but it is irrelevant.
4-6
- The response indicates some understanding of the specific demands of the question.
- Relevant economic theory is described.
- Some relevant economic terms are included.
- The response contains evidence of superficial synthesis or evaluation.
- A relevant real-world example(s) is identified.
7-9
- The response indicates understanding of the specific demands of the question, but these demands are only partially addressed.
- Relevant economic theory is partly explained.
- Some relevant economic terms are used appropriately.
- Where appropriate, relevant diagram(s) are included.
- The response contains evidence of appropriate synthesis or evaluation but lacks balance.
- A relevant real-world example(s) is identified and partly developed in the context of the question.
10-12
- The specific demands of the question are understood and addressed.
- Relevant economic theory is explained.
- Relevant economic terms are used mostly appropriately.
- Where appropriate, relevant diagram(s) are included and explained.
- The response contains evidence of appropriate synthesis or evaluation that is mostly balanced.
- A relevant real-world example(s) is identified and developed in the context of the question.
13-15
- The specific demands of the question are understood and addressed.
- Relevant economic theory is fully explained
- Relevant economic terms are used appropriately throughout the response.
- Where appropriate, relevant diagram(s) are included and fully explained.
- The response contains evidence of effective and balanced synthesis or evaluation.
- A relevant real-world example(s) is identified and fully developed to support the argument.