Economics Tuition – Video by Economics Focus
This e-learning video developed by JC Economics Tutor Simon Ng of Economics Focus examines the topic of Market Failures, whereby students are required to identify the characteristics of ‘externality’ and ‘public good’ to understand how the absence of government intervention can give rise to market failures. It is important that students utilize economics concepts, like characteristics of rivalry and excludability, to provide well-elaborated answers.
Using appropriate examples, explain and illustrate the terms ‘externality’ and ‘public good’. 
Analysis of The Question
For this question, the requirement of the question is to be able to explain the characteristic of the concepts of externality and public goods and how it leads to market failure, citing relevant examples to support the explanation.
Students should also keep their explanations concise, while maintaining separate paragraphs for the analysis of concept and exemplification using the relevant example.
Source of Information
Part of knowledge needed for this question:
- Define characteristic of public goods of non-excludability and non-rivalry
- Explain how the characteristic of non-excludability and non-rivalry leads to the problem of market failure
- Explain the characteristic of public goods using a relevant example (e.g. national defense)
- Explain how positive (or negative) externalities lead to the problem of market failure, using the concept of deadweight loss
- Explain the concept of externality using a relevant example each (e.g productivity gain from education services for positive externality, traffic congestion from road usage as a form of negative externality)