Explain, using examples, the difference between private goods and public goods and why public goods will not be supplied by private enterprise.

Mark scheme

Marking points from the official mark scheme (May/June 2020). The mark or mark type is shown in brackets.

1. For knowledge and understanding of the distinction between the two types of good based upon excludability (1 mark) and rivalry in consumption (1 mark)
2. For application explaining why public goods will not be supplied in a free market economy because of non-excludability and the lack of rivalry in consumption (4 marks) with due reference to the free rider issue (2 marks)
3. Up to 8 marks for Analysis
4. For analysis explaining the underproduction and under-consumption of merit goods based upon information failure in a market economy (Up to 4 marks)
5. For analysis that compares direct provision of merit goods with at least one alternative means of provision, e.g. subsidisation of these goods or public education campaigns (Up to 4 marks)
6. Up to 4 marks for Evaluation
7. For evaluative comment and a reasoned conclusion on the most effective policy (4 marks)