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1.8 The market mechanism, market failure and government intervention in markets

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Question 30

A municipal council is assessing the economic characteristics of four proposed urban projects:

  • Project WWW: An unencrypted regional radio weather advisory signal.
  • Project XXX: A toll bridge where electronic tolls are charged, but traffic flow is low enough that congestion is non-existent.
  • Project YYY: A city-centre public park with no fences, which becomes highly congested on sunny days.
  • Project ZZZ: A municipal landfill site where a strict gate fee is charged and disposal capacity is limited.

Which of the following statements correctly classifies these projects?

A

Project WWW is a pure public good because it is non-rival and non-excludable, whereas Project XXX is a quasi-public good because it is excludable but non-rival.

B

Project WWW is a quasi-public good because it is non-rival but excludable, whereas Project YYY is a pure public good because it is free to access.

C

Project XXX is a private good because a price is charged, whereas Project ZZZ is a quasi-public good because it is provided by the municipal council.

D

Project YYY is a pure public good because there are no fences to exclude users, whereas Project ZZZ is a quasi-public good because it is rival but non-excludable.

Markscheme

1.8 The market mechanism, market failure and government intervention in markets Questions

  1. A Level
  2. /Economics
  3. /1.8 The market mechanism, market failure and government intervention in markets

378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.

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