WASSCE Economics · Paper 1 style

Market failure

One sample question with the full working. 1 more in the app, with instant feedback and repair sessions for the traps below.

Which of the following is a public good?

Astreet lighting
Ba bottle of soft drink
Ca private car
Da bag of rice

Show the answer and working

Answer: A

Public good: non-rival, non-excludable.

Trap B Picks another type in the same classification: Learn each classification as a table of types with one defining feature each (monopoly: one seller; monopsony: one buyer; command economy: central planning).

Trap C Misunderstands public goods and externalities: Public goods are non-rival and non-excludable (street lighting, defence) – free-rider problem. Merit goods (education, health) are under-consumed if left to the market. Externalities: costs/benefits to third parties (pollution = negative; vaccination = positive).

Trap D Applies the rule for the opposite case: Before answering, name the case in the stem (inelastic? price floor ABOVE equilibrium? point INSIDE the PPC?) and recall the rule for that case only.

Traps in Market failure

Picks another type in the same classification
Learn each classification as a table of types with one defining feature each (monopoly: one seller; monopsony: one buyer; command economy: central planning).
Misunderstands public goods and externalities
Public goods are non-rival and non-excludable (street lighting, defence) – free-rider problem. Merit goods (education, health) are under-consumed if left to the market. Externalities: costs/benefits to third parties (pollution = negative; vaccination = positive).
Applies the rule for the opposite case
Before answering, name the case in the stem (inelastic? price floor ABOVE equilibrium? point INSIDE the PPC?) and recall the rule for that case only.

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