DHS 2025 Government Microeconomic Goals and Policies

1 Theme 2: Markets 2.2 Microeconomic Objectives and Policies Section A: Review Questions Multiple-Choice Questions 1. A public good is a good whose benefits are A. diminished as it is consumed and whose benefits cannot be withheld from anyone. B. not diminished as it is consumed and whose benefits cannot be withheld from anyone. C. not diminished as it is consumed and whose benefits can be withheld from anyone. D. concentrated among a select few. 2. Consumption of a pure public good A. increases the supply of the good. B. denies the opportunity to consume the good to others. C. excludes others from consuming the good somewhat. D. neither depletes the good nor excludes others from consuming it. 3. Which one of the following comes closest to being a 'pure' public good? A. Defence B. Postal service C. Health service D. Education 4. The net benefit to society from reducing pollution is equal to A. the sum of the benefits of reducing pollution and the costs. B. the difference between the benefits of reducing pollution and the costs. C. the additional benefit plus the additional costs. D. the quantity of pollution, such as the tons of reduction in sulphur dioxide. DUNMAN HIGH SCHOOL (SENIOR HIGH) ECONOMICS UNIT 2025 YEAR 5 H2

2 5. Match the terms on the left with the definitions in the column on the right. i. Third parties a. spillover costs or benefits imposed on third parties ii. Market failure b. the cost to society of producing a good including both the private costs and external costs iii. Externalities c. people who experience spillover benefits or costs iv. Public goods d. benefits from these goods aren’t diminished by consumption and cannot be withheld from anyone v. Free rider e. the failure of the market to achieve an optimal allocation of the economy’s resources vi. Social cost f. someone who consumes a good or service without paying for it

3 Short-answered questions 1. Adapted from VJC2019 H2 P1 Q1 After years of foot -dragging India will begin work in around a month on a US$87 billion infrastructural scheme to connect some of the country’s biggest rivers. The mammoth plan entails linking nearly 60 rivers, which the government hopes will cut farmers’ dependence on fickle monsoon rains by bringing millions of hectares of cultivatable land under irrigation. Government officials say diverting water from bountiful rivers such as the Ganges, Godavari and Mahanadi to sparse waterways by building dams and a network of canals is the only solution to floods and droughts that plague India every year, killing hundreds of poor people and withering crops. Source: Reuters, 1 Sep 2017 a. Explain why a network of artificial canals for flood control can be considered a public good. b. Explain public good as a source of market failure. 2. Adapted from HCI2019 H2 P1 Q2 The Inclusive Internet Index measures how effectively indivi