Externalities, Public Goods & Policy Responses — Drills · Grade 12 Social Studies
Chapter: Economic Foundations & Market DecisionsWhat these drills covers
By the end of Externalities, Public Goods & Policy Responses you should be able to:
- I can distinguish private and external costs.
- I can explain a civic or economic mechanism using evidence, assumptions, and a qualified conclusion.
4 questions, written answer, each with a worked explanation.
Vocabulary used: externality, social cost, nonrival, nonexcludable, free rider.
Problem 1
Answer and explanation
An effect on people outside the exchange may not enter the buyer’s or seller’s decision. Under the supplied model, the $4 external harm raises social cost beyond the $10 private cost. Identify and measure the effect rather than assuming every price includes it.
Problem 2
Answer and explanation
Funding describes who pays. The economic category concerns rivalry and exclusion. A publicly funded service can have scarce places or exclude users; evaluate its use characteristics separately from its financing.
Problem 3
Answer and explanation
Rules, cooperation, information, and enforcement can change behavior. The model identifies a possible pathway, while evidence establishes whether it operates and how strongly in the particular setting.
Problem 4
Answer and explanation
A response still needs reliable measurement, authority, administration, incentives, and comparison with alternatives. Explain its mechanism and limits, including who bears costs. The original problem does not guarantee every proposed remedy works.