This is a drawing exercise to get the students to see why public goods are a market failure in a free market.

Put the students in pairs with a mini whiteboard. Show them the clip of flood defences.

Ask them to draw these axes on their whiteboard and then to draw a line representing the cost of making each km of sea wall (the MC).

Draw a line representing the cost of making each km of sea wall (the MC).
Draw a line that shows the benefit of building an extra km of sea wall somewhere in the UK (the marginal benefit). Remember that we will build in the areas most prone to flooding first.
How many km of sea wall should we build? Show this on your graph.

Community surplus is maximised at Q1(the triangle)

How many will be made in a free market?