VCE Economics 3/4 - CPAP Practice Examination No 1 2018 - Answers and Advice

Sep 20, 2026

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VCE Economics 3/4 CPAP practice examination No 1 (2018) provides suggested responses and advice for MC questions in Section A. The content includes model answers explaining correct options and why common distractors are incorrect, with reference to key economics concepts such as public goods versus common access resources, public and capital expenditure, infrastructure and budget deficit impacts, sources of government revenue, and market failure addressed by congestion taxes. It also highlights typical reasons students lose marks, including misunderstandings of non-excludability and non-rivalrous attributes.

LanguageEnglish

CategoryExam

FormatPDF

Pages27

Reading Time1 h 8 min

AccessFree to download

Section A

Question 1

Question 2

Question 3

Question 4

COMMERCE PRESENTATIONS AND PUBLICATIONS VCE ECONOMICS 3/4 CPAP Practice examination No 1 2018 SUGGESTED RESPONSES/ADVICE Answers to MC questions | 1 | A | B | C | D | | --- | --- | --- | --- | --- | | 2 | A | B | C | D | | 3 | A | B | C | D | | 4 | A | B | C | D | | 5 | A | B | C | D | | 6 | A | B | C | D | | 7 | A | B | C | D | | 8 | A | B | C | D | | 9 | A | B | C | D | | 10 | A | B | C | D | | 11 | A | B | C | D | | 12 | A | B | C | D | | 13 | A | B | C | D | | 14 | A | B | C | D | | 15 | A | B | C | D | 2 SECTION A Question 1 A major difference between public goods and common access resources is that: A. Common access resources are non-excludable while public goods are excludable B. Public goods suffer from the free rider problem but common access resources do not suffer from the free rider problem C. Public goods are non-depletable (non- rivalrous) but common access resources are depletable (rivalrous) D. Public goods are provided by public companies in the private sector while common access resources are provided by governments In the 2017 examination, question 1b required students to distinguish between public goods and common access resources for 3 marks. More than 50% of students were unable to achieve full marks because they failed to demonstrate an adequate understanding of key terms such as non-excludability and nondepletability (non-rivalrous). For the current question, option C is the best response because it is the only accurate statement, highlighting the key difference between the two terms. Option A is incorrect because public goods are non-excludable (i.e. one can’t exclude non-payers from enjoying the services provided by these types of goods, such as defence). Option B is incorrect because common access resources also suffer from the free rider problem (e.g. one can’t exclude those who are not willing to pay for clean air from enjoying the benefits that clean air provides). Option D is incorrect because public goods are not provided by public companies. Instead, they are typically provided, or funded by governments. Question 2 In relation to the chart below, which of the following statements is inaccurate? A. Government capital expenditure includes transport and telecommunications infrastructure but excludes spending on politicians’wages B. The change in capital spending by the federal government over the past three years has contributed to the reduction in the budget deficit C. State and federal government expenditure on capital has increased over the past three years D. The recent change in capital spending should help to address congestion in Australian cities The Study Design requires students to have some understanding of infrastructure (a form of capital spending) as well as to know the difference between current and capital expenditure. In addition, the key skills in the Study Design require students to interpret and analyse statistical and graphical data. Option B is the best response because it contains the only statement that is inaccurate. Over the past three years, federal government spending on capital items has increased which has not helped to reduce the budget deficit given that it adds to total government spending and therefore increases pressure on the budget deficit. All other statements contained in options A, C and D are accurate. With respect to option A, spending on politicians’ CPAP © 2018 VCE Economics Units ¾ Examination No 1: Answers and advice 3 wages is a current expenditure (not capital expenditure) and is therefore not included with transport and telecommunications infrastructure as a capital item. With respect to option C, the bottom bar chart clearly shows state government capital expenditure has increased from approximately $35 billion to approximately $45 billion, while federal government capital expenditure has increased from approximately $14 billion to $20 billion. With respect to option D, given that capital spending ha

FAQs

What is the key difference between public goods and common access resources in Question 1?

Public goods are excludable and common access resources are non-excludable, and the correct option C emphasizes the distinction between non-depletable (non-rivalrous) public goods and depletable (rivalrous) common access resources.

Why is option B considered inaccurate in Question 2?

Option B is inaccurate because increased federal capital spending over the past three years would add to total government spending, increasing pressure on the budget deficit rather than reducing it.

How does a congestion tax relate to market failure in Question 4?

A congestion tax is designed to reduce negative externalities arising when too many vehicles clog roads, including effects like pollution and related social costs in production and consumption.

Sep 20, 2026

Uploaded by Putri