Question 23M.1.SL.TZ2.1b
| Date | May 2023 | Marks available | [Maximum mark: 15] | Reference code | 23M.1.SL.TZ2.1b |
| Level | SL | Paper | 1 | Time zone | TZ2 |
| Command term | Discuss | Question number | b | Adapted from | N/A |
Using real-world examples, discuss whether public goods should always be provided directly by the government.
[15]
Refer to Paper 1 markbands for May 2022 forward, available under the "My tests" tab > supplemental materials.
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
Part (b) 15 marks
Students found this question challenging because there was some confusion on what is and what is not a public good. The best answers clearly defined public goods as non-rivalrous and non-excludable and explained they were not provided because the free rider problem means producers are unable to make a profit from production. Effective real-world examples used included defence, streetlighting and flood protection and used specific countries where these public goods were provided. Strong responses went on to discuss the advantages and disadvantages of the state providing public goods and to suggest private sector alternatives to the provision of public goods such as contracting out their provision. Lowerachieving responses tended to consider goods provided by the state that are not public goods such as healthcare, education and public transport. These goods do not meet the criteria of being non-rivalrous and non-excludable.
