Text A, Paragraph 1
In 2023, the government of Denmark increased its spending on public goods such as national parks and museums. These resources are intended to improve the welfare of the entire population, but private companies rarely find it profitable to provide them, despite their widespread use.
Define the term public goods indicated in bold (Text A, paragraph 1).
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Text E, Paragraph 3
The Irish government has made sure that essential services like public transport and street lighting are widely available. These are often funded through taxation, as private companies would likely avoid offering these services due to their lack of profitability.
Outline one role of the government in providing public goods, as found in (Text E, paragraph 3).
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Text D, Paragraph 1
In many cities, some residents benefit from public services like waste collection without contributing to the cost. This free rider problem becomes more pronounced as fewer people pay for the service, eventually leading to financial strain on the system.
Define the term free rider problem indicated in bold (Text D, paragraph 1).
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Text D, Paragraph 1
In comparison to public goods like clean air, private goods such as cinema tickets are typically sold by companies to individual customers. When tickets are sold out, others are excluded from attending the show, illustrating the limited nature of these goods.
Outline the difference between public goods and private goods indicated in bold (Text D, paragraph 1).
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Text A, Paragraph 2
As more residents in Johannesburg bypassed paying for electricity, the city struggled with power outages and a lack of resources to maintain the grid. This growing free rider problem placed financial pressure on the electricity provider and led to a variety of problems.
State two consequences of the free rider problem as indicated in bold (Text A, paragraph 2).
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Text D, Paragraph 1
In 2023, the Spanish government increased its defence budget, but this decision came with a notable opportunity cost. Resources that could have been spent on social housing were instead diverted to military spending, raising concerns about how best to allocate limited funds.
Outline the opportunity cost of providing public goods, as indicated in bold (Text D, paragraph 1).
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Text A, Paragraph 1
Public goods, such as national defence, benefit all citizens, while merit goods like education provide individual benefits but also offer wider societal advantages. Governments often step in to ensure both are adequately provided, though the nature of their provision can differ.
Outline the difference between public goods and merit goods as indicated in bold (Text A, paragraph 1).
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Text A, Paragraph 2
In recent years, the UK has faced criticism for the lack of funding towards its public libraries, which provide free educational resources and community spaces accessible to all. The government acknowledges that these libraries create benefits for society, such as improving literacy and reducing social inequalities, yet they remain underfunded due to budget constraints. Critics argue that without government funding, many communities will lose access to these important resources.
Explain why public libraries might be underprovided in a free market.
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Text D, Paragraph 4
In recent years, Kenya has introduced several community health programmes, including free vaccination clinics and health education workshops. As these services benefit all members of society by reducing the spread of disease and promoting wellness, they are considered public goods. Private healthcare providers argue that they have little incentive to offer these services. Government officials are debating whether to increase funding for these public health initiatives, given their significant benefits for public safety and the overall economy.
Explain why community health programmes might be under-provided by private firms in a free market.
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Text C, Paragraph 3
The USA’s coastal areas rely on flood defences to protect communities from extreme weather events. Recently, scientists have warned of rising sea levels and urged the government to increase funding for flood barriers and other defences. Since flood defences protect all residents equally and are accessible to everyone, they are considered public goods. Private companies are unwilling to build or maintain them so as a result, flood defence projects remain underfunded despite their importance for public safety.
Explain why flood defences might be under-provided by private firms in a free market.
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