Economics 0455 · IGCSE · Market failure

Market failure — practice question

A government thinks that people consume too much sugar but too little fruit. Which set of policies would the government put in place?

  • Asugar: increase its tax; fruit: increase its tax
  • Bsugar: increase its tax; fruit: subsidise its production
  • Csugar: subsidise its production; fruit: increase its tax
  • Dsugar: subsidise its production; fruit: subsidise its production

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