(a)[8]
Use diagrams to show the distinction between merit goods and demerit goods.
(b)[12]
Discuss whether it would be preferable for smoking to be banned completely or instead to be taxed with an indirect tax.
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 merit goods and demerit goods (negative externalities for demerit goods; positive externalities for merit goods; merit goods under-consumed; demerit goods over-consumed). (Possible splits shown as: 3/1, 2/2, 1/3).” …
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