(a)[4]
Explain why a plastic bottle may be regarded as both a private good and a demerit good.
(b)[4]
- Distinguish between an ad valorem tax and a specific tax in terms of how each is charged. [2]
- Explain whether the ‘bottle tax’ mentioned in the extract is an ad valorem tax or a specific tax. [2]
(c)[6]
- With the help of a diagram, analyse how the ‘bottle tax’ affects the price and sales of plastic bottles. [2]
- With the help of diagram(s), explain what would determine how the ‘bottle tax’ is shared by consumers of plastic bottles. [4]
(d)[6]
Discuss whether taxing plastic bottles is the most effective method of reducing plastic waste in developing economies.