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Question 23M.1.SL.TZ2.a

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Date May 2023 Marks available [Maximum mark: 10] Reference code 23M.1.SL.TZ2.a
Level SL Paper 1 Time zone TZ2
Command term Explain Question number a Adapted from N/A
a.
[Maximum mark: 10]
23M.1.SL.TZ2.a

Explain two types of government intervention that could be used to correct the market failure arising from the consumption of demerit goods.

[10]

Markscheme

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

Answers may include:

  • Terminology: market failure, demerit goods.
  • Explanation: of any two types of government intervention such as indirect taxes, legislation and regulation, education/awareness creation/negative advertising.
  • Diagram could show market failure of demerit goods and/or demand and supply diagram showing the consequence of the policy explained.

A maximum of [6] should be awarded if only one form of government intervention is explained.

Assessment Criteria

Part (a) 10 marks

 

Examiners report

This question was generally well answered by candidates. Answers showed good levels of knowledge of the market failure associated with demerit goods in terms of the over-consumption of demerit goods because of negative consumption externalities and this was supported by an effective diagram. Students considered a variety of policies to reduce the consumption of demerit goods including indirect taxes, regulation, minimum prices, advertising and education. These policies were illustrated by examples such as cigarettes and alcohol, along with diagrams. The main mistake made by candidates was to show an indirect tax shifting the demand curve rather than the supply curve.

Syllabus sections