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Question 22N.1.SL.TZ0.1b

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Date November 2022 Marks available [Maximum mark: 15] Reference code 22N.1.SL.TZ0.1b
Level SL Paper 1 Time zone TZ0
Command term Discuss Question number b Adapted from N/A
b.
[Maximum mark: 15]
22N.1.SL.TZ0.1b
(b)

Using real-world examples, discuss the view that governments should intervene if markets fail to provide public goods.

[15]

Markscheme

Marks should be allocated according to the paper 1 markbands for May 2022 forward, part B.

Answers may include:

  • Terminology: public goods, market failure.
  • Theory: explanation of the two characteristics of public goods (non-rivalrous, non-excludable), the free rider problem, why the market fails and how governments can intervene by directly providing public goods or by contracting out to the private sector.
  • Diagram: not needed for this question.
  • Synthesis (discuss): which public goods should be provided, how much should be provided, benefits derived from government provision vs. private sector provision, costs of provision.
  • Example(s): real-world examples of where governments have intervened or have not intervened in response to public goods.

N.B. It should be noted that theory and diagrams 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.

Examiners report

This question caused difficulties for a significant number of students. The main cause of the problem faced by candidates was confusion on what is and what is not a public good. Some students evaluated government intervention in the market for healthcare and education, which are not public goods. High-achieving responses focused on the principles of the non-rivalrous and non-exclusiveness of public goods and why governments need to intervene to provide them. Strongest answers fully discussed the advantages and disadvantages of government intervention in public goods, such as national defence, flood barriers and streetlighting and supported their discussion with effective real-world examples.

Syllabus sections