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Edexcel IGCSE Economics 1.1.5 The Mixed Economy Questions

Use this mixed-economy set to define sectors, explain market failure and judge privatisation or public provision in context.

Syllabus
First assessment 2019
Course
Economics 4EC1

Exam points

  • Define mixed economy, public sector, private sector and privatisation from mark-scheme wording.
  • Explain market failure using public goods, free riders, information gaps or externalities.
  • Evaluate intervention or privatisation for consumers, workers, firms and governments.

Covered syllabus points

1.1.5.a Mixed economy1.1.5.b Public and private sector1.1.5.c Public and private sector ownership, control and aims1.1.5.d What, how and for whom to produce in a mixed economy1.1.5.e Market failure and inefficient resource allocation1.1.5.f Why governments intervene in markets1.1.5.g Public goods and the free-rider problem1.1.5.h Public and private sector roles in production1.1.5.i Relative importance of public and private sectors1.1.5.j Privatisation1.1.5.k Effects of privatisation on stakeholders

Question 1

[Maximum number: 2]

What is meant by the term mixed economy?

Question 2

[Maximum number: 2]

What is meant by the term private sector?

Question 3

[Maximum number: 9]

Question (a)

(a)

The Brazilian Government announced plans to privatise one of its state-owned food companies.

Explain one possible advantage of privatisation for consumers in Brazil.

[ 3 ]

Question (b)

(b)

The Tallinn Song Festival Grounds (TSFG) is a popular live music venue in Estonia and can hold 65,000 people. Although it is very popular there are only a few firms selling food and drink at the TSFG venue.

The lack of competition at the TSFG venue means that service is slow and queues are long. Food and drink prices are expensive and security checks mean that no food and drink can be brought in from outside the TSFG venue.

With reference to the data above and your knowledge of economics, analyse how market failure is likely to occur at the TSFG venue.

[ 6 ]

Question 4

[Maximum number: 6]

The Tallinn Song Festival Grounds (TSFG) is a popular live music venue in Estonia and can hold 65,000 people. Although it is very popular there are only a few firms selling food and drink at the TSFG venue.

The lack of competition at the TSFG venue means that service is slow and queues are long. Food and drink prices are expensive and security checks mean that no food and drink can be brought in from outside the TSFG venue.

With reference to the data above and your knowledge of economics, analyse how market failure is likely to occur at the TSFG venue.

Question 5

[Maximum number: 1]

State one reason why governments intervene in the economy.

Figure 2 shows selected financial data of a firm selling shoes.

Figure 2

Figure 2

Question 6

[Maximum number: 1]

Define the term free rider.

Question 7

[Maximum number: 1]

Which one of the following is most likely to be provided by the public sector in Cyprus?

A

Cars

B

Roads

C

Driving lessons

D

Petrol

Question 8

[Maximum number: 6]

A concert venue in Malaysia holds a maximum of 3,200 people for each performance. The quantity of tickets demanded for the most recent concerts is shown in Figure 5.

Figure 5

Figure 5

The Cuban Government owns and runs most industries in the country and more than 75% of the labour force is employed by the state.

With reference to the data above and your knowledge of economics, analyse the benefits of having a large public sector to a country such as Cuba.

Question 9

[Maximum number: 2]

What is meant by the term privatisation?

Question 10

[Maximum number: 3]

The Brazilian Government announced plans to privatise one of its state-owned food companies.

Explain one possible advantage of privatisation for consumers in Brazil.

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