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Question 23M.1.SL.TZ1.b

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Date May 2023 Marks available [Maximum mark: 15] Reference code 23M.1.SL.TZ1.b
Level SL Paper 1 Time zone TZ1
Command term Discuss Question number b Adapted from N/A
b.
[Maximum mark: 15]
23M.1.SL.TZ1.b

Using real-world examples, discuss whether the provision of subsidies is the best way to increase the consumption of merit goods.

[15]

Markscheme

Refer to Paper 1 markbands for May 2022 forward, available under the "My tests" tab > supplemental materials.

Answers may include:

  • Terminology: merit good, subsidy.
  • Explanation: of the impact of subsidies in terms of lowering production costs, increasing supply, lowering price and increasing the quantity demanded.
  • Diagram: demand and supply diagram showing the impact of a subsidy, or use of an MSC/MSB diagram.
  • Synthesis (discuss): the strengths and weaknesses of the use of subsidies, the strengths and weaknesses of other measures such as, direct government provision, legislation and regulation, awareness creation through education/advertising, consideration of “best”.
  • Examples: use of real-world examples to show instances of the consumption merit goods being increased through the use of subsidies or through the use of other means.

A maximum of [12] should be awarded if only subsidies are considered.

N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded.

Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.

Assessment Criteria

Part (b) 15 marks

Examiners report

Most candidates were able to explain how subsidies work and illustrate them on a properly labelled diagram. It was surprising that the concept of merit goods was not always properly explained. There were some good real-world examples of merit goods but why they are merit goods was often not explained. Many were able to evaluate the use of subsidies to increase the consumption of merit goods but did not compare them to any other ways to increase consumption.

Syllabus sections