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IGCSE Economics: Merits of The Market System and Market Failure

The document outlines various activities related to IGCSE Economics, focusing on the merits of the market system and market failure. It includes discussions on costs and benefits of local government projects, debates on market system advantages, and analyses of external costs like environmental pollution. Additionally, it addresses the implications of government actions on market equilibrium and the consumption of demerit goods such as alcohol and cigarettes.

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18 views2 pages

IGCSE Economics: Merits of The Market System and Market Failure

The document outlines various activities related to IGCSE Economics, focusing on the merits of the market system and market failure. It includes discussions on costs and benefits of local government projects, debates on market system advantages, and analyses of external costs like environmental pollution. Additionally, it addresses the implications of government actions on market equilibrium and the consumption of demerit goods such as alcohol and cigarettes.

Uploaded by

entertainment
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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IGCSE Economics

Merits of the market system and market failure

Starter activity
Local government in Wuxi is constructing an underground railway line with in the city. Identify and list
costs and benefits of this action to the following parties.
a. To the local government (2 minutes)
b. To Wuxi citizens (2vminutes)
Read the definitions of different types of costs and benefits below and identify one suitable example
for each type. (5 minutes)
Activity 19 – (5 minutes)
A foreign company is entering Chinese market to produce and sell their products. List two possible
examples for each of the following types of costs and benefits.
a. private costs
b. private benefits
c. external costs
d. external benefits.
Activity 20 - Class debate
Topic - Advantages of market system outweigh the disadvantages.
• Team 1 Vs Team 2
• Team 3 Vs Team 4
• Team 5 Vs Team 6
• Team 7 Vs Team 8
 Odd teams – affirmative, Even teams - negative
 5 minutes are given for all the teams to get ready.
 There are two debate sessions, 15 minutes each.
 Only four teams will be chosen for the debate.

Activity 21 – (6 minutes)
a. Explain why environment pollution is an external cost. [2]
b. Analyse how environment pollution would lead to market failure. [6]

Homework
In 2003, Kenya introduced free primary education. In a number of other African countries, state schools
charge fees.
a. Identify two arguments for providing free primary education. [2]
b. Explain why, if left to market forces, education is likely to be under-consumed. [6]

1
Activity 22 – (6 minutes)
Between 1977 and 2006, alcohol-related medical hospital treatments doubled in the UK. In 2006 the
state funded, National Health System (NHS), carried out more than a quarter of a million treatments for
medical problems caused by excessive drinking, including liver disease and severe alcohol poisoning.
a) Explain why alcohol is a demerit good. [2]
b) Explain two ways, using which the UK government could reduce the consumption of alcohol.
[6]

Activity 23 – (5 minutes)
Using a demand and supply diagram, explain the impact of following government actions on market
equilibrium.
a.) imposing indirect tax
b.) providing subsidy

Homework
Discuss the effectiveness of imposing indirect tax by the government on demerit goods such as
cigarettes in order to discourage the consumption. (6)

Activity 24 - Class debate


Think about the current underground railway facility being constructed in Wuxi.
Allowing a private firm to build and run that facility is more efficient than the government doing it by its
own.
Team 1 Vs Team 2
Team 3 Vs Team 4
 Odd teams – affirmative, Even teams - negative
 5 minutes are given for all the teams to get ready.
 There are two debate sessions, 15 minutes each.

Activity 25 - Class debate


China has been using a lot of its natural resources during past 15 years. Should China conserve
its resources or keep using its resources at the current rate of use?
Team 5 Vs Team 6
Team 7 Vs Team 8
 Odd teams – affirmative, Even teams - negative
 5 minutes are given for all the teams to get ready.
 There are two debate sessions, 15 minutes each.

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