A Level Economics H3 Policy Evaluation Quiz

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A-Level Economics H3 Quiz - Policy Evaluation

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Duration: 60 minutes
Total Marks: 40
Topic: Policy Evaluation (syllabus-first content; no past-paper evidence available for H3 Economics)

Instructions:

• Answer all 20 questions.
• Section A: short factual and conceptual items (1 mark each).
• Section B: applied evaluation items (2 marks each).
• Section C: extended evaluation items (3 marks each).
• Use economic reasoning and refer to H3 themes where relevant.
• This quiz is generated from syllabus context only and is not derived from past-year papers.

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Section A: Conceptual Recall (Questions 1–10, 1 mark each)

1. In policy evaluation, what does the term "policy efficiency" refer to?

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2. State one difference between positive and normative policy evaluation.

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3. What is meant by "opportunity cost" in evaluating a government policy?

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4. Give one example of a policy objective that is distributional rather than allocative.

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5. Define "unintended consequence" in the context of policy evaluation.

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6. What does "ceteris paribus" assume when evaluating a policy's impact?

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7. Name one tool used to evaluate policy under bounded rationality.

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8. In game-theoretic policy evaluation, what is a Nash equilibrium?

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9. What is one limitation of using GDP as a measure of policy success?

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10. State one reason why time-inconsistent preferences complicate policy evaluation.

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Section B: Applied Evaluation (Questions 11–15, 2 marks each)

11. A government introduces a subsidy for electric vehicles (EVs) to reduce emissions. Using the Capital Approach, explain one way to evaluate whether this policy supports sustainable development.

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12. A nudge policy places healthier food at eye level in school canteens. Evaluate one likely intended effect and one possible unintended consequence.

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13. Firms in a polluting industry are given tradeable permits under Coase Theorem assumptions. Explain how policy evaluation would assess market failure correction.

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14. Asymmetric information exists in the health insurance market. Describe one policy measure and how evaluation would judge its success.

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15. Using prisoner's dilemma logic, evaluate why individual firms may oppose a voluntary carbon-cut pact without policy enforcement.

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Section C: Extended Evaluation (Questions 16–20, 3 marks each)

16. A small state implements a carbon tax and uses revenue for social transfers. Evaluate the policy using: efficiency, equity, and unintended consequences (1 mark each).

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17. Behavioural biases such as loss aversion and status quo bias affect citizen response to a new pension policy. Evaluate how these biases should be accounted for in policy evaluation.

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18. The government uses a nudging campaign plus efficiency wages to reduce moral hazard in public childcare staffing. Evaluate the combined policy using appropriate H3 concepts.

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19. A development policy aims to build human and social capital in lagging regions. Using the Capital Approach, evaluate two metrics and one limitation of this evaluation method.

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20. Game theory suggests rivals may not cooperate on R&D sharing. Evaluate a policy that uses monitoring and co-payment to align firm incentives, citing one benefit and one risk.

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A-Level Economics H3 Quiz - Policy Evaluation: Answer Key

Topic: Policy Evaluation (syllabus-first; no past-paper evidence)
Total Marks: 40

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Section A: Conceptual Recall (1 mark each)

Q1. Policy efficiency
Answer: Achieving policy objectives at lowest cost / max benefit per dollar.
Teaching note: Efficiency in H3 evaluation means resource allocation; not just output.

Q2. Positive vs normative evaluation
Answer: Positive evaluates "what is" with evidence; normative uses value judgements on "what ought to be".
Teaching note: Keep distinct; evaluators mix both but must label them.

Q3. Opportunity cost
Answer: Next-best alternative forgone by using resources for the policy.
Teaching note: Always mention sacrificed option (e.g., roads vs EV subsidy).

Q4. Distributional objective
Answer: Reducing income inequality / regional equity.
Teaching note: Allocative = efficiency; distributional = fairness.

Q5. Unintended consequence
Answer: Side effect not anticipated by policymakers.
Teaching note: E.g., EV subsidy raises used-car prices.

Q6. Ceteris paribus
Answer: Other factors held constant while assessing policy impact.
Teaching note: Real evaluation relaxes this; flag as limitation.

Q7. Bounded rationality tool
Answer: Nudge / default option / simplification.
Teaching note: From Theme 1; not full behavioural model.

Q8. Nash equilibrium
Answer: No agent can improve by changing strategy given others' choices.
Teaching note: Pure strategies only in H3.

Q9. GDP limitation
Answer: Ignores distribution, environment, non-market value.
Teaching note: Capital Approach improves this.

Q10. Time-inconsistent preferences
Answer: People delay beneficial action; policy effects misjudged.
Teaching note: Procrastination reduces long-term take-up.

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Section B: Applied Evaluation (2 marks each)

Q11. EV subsidy + Capital Approach (2m)
Answer: Evaluate via natural capital (emissions drop) and produced capital (EV infra).
Marks: 1 for naming capital type, 1 for linkage to sustainability.
Teaching: Subsidy shifts private cost; Capital Approach tracks stocks.

Q12. Nudge evaluation (2m)
Intended: Better food choice (1m). Unintended: unequal access for tall/short students (1m).
Teaching: Nudges can fail if design ignores heterogeneity.

Q13. Tradeable permits (2m)
Answer: Evaluate by permit price discovery and pollution reduction vs baseline (1m); property rights clarity enables Coase (1m).
Teaching: Market failure corrected if transaction costs low.

Q14. Asymmetric info measure (2m)
Answer: Screening via health checks; success = adverse selection reduced (1m+1m).
Teaching: Evaluation uses enrolment fairness.

Q15. Prisoner's dilemma (2m)
Answer: Each firm fears rival free-ride; non-cooperation dominant (1m); policy enforcement changes payoff (1m).
Teaching: Voluntary pacts unstable without mechanism.

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Section C: Extended Evaluation (3 marks each)

Q16. Carbon tax evaluation (3m)
Efficiency: Pigouvian correction (1m). Equity: transfers help poor (1m). Unintended: carbon leakage (1m).
Teaching: Use all three lenses from syllabus.

Q17. Biases in pension (3m)
Loss aversion → low opt-in (1m); status quo → stick to old (1m); evaluation must use behavioural adjust (1m).
Teaching: Standard models overstate rationality.

Q18. Nudge + efficiency wage (3m)
Nudge reduces shirking (1m); wage aligns principal-agent (1m); combined cost-benefit evaluated (1m).
Teaching: Moral hazard addressed by mix.

Q19. Capital Approach (3m)
Metrics: school enrolment, trust indices (2m); limitation: measurement difficulty (1m).
Teaching: Social capital soft data.

Q20. R&D policy (3m)
Benefit: monitoring cuts free-ride (1m); risk: co-pay deters small firms (1m); game payoff changed (1m).
Teaching: Incentive alignment via hybrid.