South Korea makes use of both economic goods and free goods. Its output includes products with both elastic and inelastic supply. The country is constructing what is expected to become the world’s first floating city, with an estimated cost of $180bn. This is intended to deal with rising sea levels brought about by climate change. Governments use several policies to cut greenhouse gases, which contribute to climate change, including banning the burning of wood for home heating.
(a)[2]
Identify one distinction between economic goods and free goods.
(b)[4]
Explain how opportunity cost might affect a government’s choice over whether to use tax revenue for a large infrastructure project.
(c)[6]
Analyse the factors that determine whether a product’s supply is elastic or inelastic.
(d)[8]
Discuss whether or not a government ought to ban the burning of wood for home heating.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Economic goods draw on resources / need factors of production” …