2023 ACJC H2 Market Failure Tutorial Worksheet

©ACJC Econs Dept/2023/Market Failure & Government Intervention Tutorial Worksheet 1 ANGLO-CHINESE JUNIOR COLLEGE JC1 Economics H2 MARKET FAILURE AND GOVERNMENT INTERVENTION Tutorial Worksheet 3 Section A: Discussion Questions Question 1: Public goods and private goods In each of the following cases, consider whether the good/s ervice is a private or a public good. Explain your answers. a. Parking spaces b. Police services c. National museum d. Public housing e. Explain why the markets for (b) and (c) above would fail. Question 2: Salmon Farming Costing Environment Salmon farming is wreaking ruin on marine ecosystems, through pollution, parasites and high fish mortality rates which are causing billions of pounds a year in damage, a new assessment of the global salmon farming industry has found. Taken together, these costs amounted to about $50bn globally from 2013 to 2019, according to a report published on Thursday. The report exam ined the salmon farming industry in Canada, Norway and Chile. It found that of the costs associated with fish farming, about 60% were borne by the producers, especially in the form of fish mortality and the cost of treating sea lice, but about 40% of the costs were borne by wider society, for instance in pollution, loss of fish populations from overfishing and the impacts on the climate crisis. Chemicals and excess nutrients from food and feces associated with salmon farms can have unintended consequences for marine organisms and human health. “Aquaculture activities are an interconnected part of the ecosystem in which they exist, and salmon farms make use of ‘free’ coastal ecosystem services such as clean water, appropriate temperatures, nutrient levels and so on. They also contribute to their deterioration, however, due to local pollution impacts from uneaten feed and feces, which are directly discharged into the marine environment.” the report reads. Scan this QR code to learn more about the environmental impact of fishing.

©ACJC Econs Dept/2023/Market Failure & Government Intervention Tutorial Worksheet 2 Salmon farming is an industry that has grown dramatically in recent years, as the world’s appetite for fish is also growing. Not only it’s already the fastest -growing food production sector in the world, but continued global growth in demand is expected. Adapted from: ZME Science and The Guardian, 11 Feb 2021 a. From the above extract, identify examples of private and external costs of salmon farming. b. Using a diagram, explain how the production of salmon results in an inefficient allocation of resources when left to market forces. c. Explain how a taxation policy might achieve allocative efficiency. d. What are the limitations of using taxation to achieve efficient allocation of resources? Question 3: Healthcare in Singapore Singapore offers universal healthcare coverage to our citizens, with a financing system anchor