Cambridge International (CAIE) · 7 The price system and the microeconomy (A Level) · 7.4 Private costs and benefits, externalities and social costs and benefits
Cambridge International (CAIE) Economics past paper questions: Private costs and benefits, externalities and social costs and benefits
Every Cambridge International (CAIE) question on Private costs and benefits, externalities and social costs and benefits from 2023 to 2025: 2 data response questions and 14 multiple choice questions. It covers 7.3 Efficiency and market failure, 8.1 Government policies to achieve efficient resource allocation and correct market failure, 7.6 Different market structures, 9.1 The circular flow of income and 7.5 Types of cost, revenue and profit, short-run and long-run production. Each question links to its paper, mark scheme and examiner report.
Data response questions on private costs and benefits, externalities and social costs and benefits
Case study: Global carbon emissions
Case study: Traffic Control
Multiple choice questions
- A-level Paper 3, November 2025, Q3
The diagram shows the marginal costs and marginal benefits of producing a good in a free market. What is the marginal external cost when the free market is in equilibrium?
- A-level Paper 3, November 2025, Q6
An economist undertakes a cost–benefit analysis of the pollution resulting from a manufacturing process. Which outcome is most likely to guide any recommendation about the optimal level of manufacturing output?
- A-level Paper 3, March 2025, Q10
What is not a reason for imposing a tax on producers based on the amount of pollution caused in the production process?
- A-level Paper 3, November 2024, Q4
A government makes it compulsory for motorbike riders to wear helmets. What would represent a positive externality of consumption associated with this decision?
- A-level Paper 3, November 2024, Q8
The diagram shows the marginal private benefit (MPB), the marginal private cost (MPC) and the marginal social cost (MSC) for firms in an industry. The equilibrium price is point X. What should happen to achieve allocative efficiency?
- A-level Paper 3, June 2024, Q3
Which combination of costs and benefits will lead to an increase in net social costs?
- A-level Paper 3, March 2024, Q3
The table shows the total amount consumers are willing to pay for different quantities of good X and the total external benefits that arise from the consumption of X. What is the value of the marginal social benefit when 5000 units are…
- A-level Paper 3, November 2023, Q3
Negative externalities, such as air pollution due to car emissions, can cause damage to people’s health in cities. Which response is most likely to occur from this situation?
- A-level Paper 3, November 2023, Q9
In recent years, the fuel cost of operating a jet aircraft has declined. Over the same period, improved design has led to much quieter aircraft. How would this affect the marginal private cost (MPC) and the marginal external cost (MEC) of…
- A-level Paper 3, June 2023, Q6
Which statement is correct?
- A-level Paper 3, June 2023, Q8
Which action would produce a positive externality of production?
- A-level Paper 3, June 2023, Q12
A government hopes to build an athletics stadium to hold the World Games. The stadium would have high private and external costs, but it would increase national pride. Why would it be difficult to use cost-benefit analysis to decide…
- A-level Paper 3, March 2023, Q7
The world’s largest pharmaceutical companies developed and distributed an effective vaccine to combat a dangerous virus. What can be associated with this vaccine programme?
- A-level Paper 3, March 2023, Q9
The result of a cost-benefit analysis of a proposed government road-building project is that there will be a positive net social benefit of $50 million. Why might the government not proceed with the project?
Question text is quoted from the question papers, © Cambridge University Press & Assessment (UCLES), for students’ private study. Open the official papers and mark schemes from the links on each question. Examiner insights are written with AI assistance and moderated by Finn.