(a)[8]
Using examples, explain why merit goods are regarded as under-consumed and demerit goods as over-consumed.
(b)[12]
Discuss whether merit goods ought always to be subsidised and demerit goods always taxed.
Economics 9708 · AS & A Level · 7.4
7.4 — practice question
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Knowledge and understanding of what information failure means (1 mark) and that, in the market, this causes some goods to be under-consumed and others to be over-consumed (1 mark). (KU: up to 2 marks)” …
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