Economics 9708 · AS & A Level · Maximum and minimum prices

Maximum and minimum prices — practice question

(a)[8]

Explain, with examples, why the prices set for merit goods and demerit goods in a free market do not match the value to consumers.

(b)[12]

Discuss how effective subsidies and indirect taxes are in making sure that the market charges the correct prices for merit and demerit goods.

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 and demerit goods (award suitable examples)” …

Full mark scheme, point by point
Step-by-step worked solution
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