Professional Documents
Culture Documents
Mark: Comment:
1.
The diagram shows the market for vaccination. There are no external costs and no government
intervention.
Answer (1)
Explanation (3)
1
2. Which of the following methods of government intervention could help correct market failure?
Answer (1)
Explanation (3)
2
3.
The diagram shows the market for university education. Assume there are no external costs. Which of the
following is true?
A: The free market equilbirium quantity exceeds the social optimum quantity
B: There is a market failure at quantity Qe
C: The triangle of welfare gain is XYV
D: The marginal external benefit remains constant at all quantities
Answer (1)
Explanation (3)
3
4.
The diagram shows a free market for vaccination in which the current equilibrium level of output is X and price
Pe. At this level of output there is
A: an external cost
B: market failure
C: an excess supply
D: government failure
Answer (1)
Explanation (3)
4
5.
The diagram shows the market for vaccinations. Assume there are no external costs. Which of the following
is true?
A: The free market equilibrium quantity exceeds the social optimum quantity.
B: The area of welfare loss is XTYZ
C: An increase in quantity from the free market equilbriumwill lead to a net welfare gain.
D: At the free market lequilbrium quantity, marginal social cost exceeds marginal social benefit.
Answer (1)
Explanation (3)
5
6.
6
Evaluate the likely private benefits and external benefits of education. Illustrate your answer with an
appropriate diagram (14)