Economics (AS & A Level) · Oct / Nov 2021 · Paper 32 · Question 2

Medical researchers indicated that drinking too many sugary drinks is bad for health. Government intervention to impose a tax on the sale of sugary drinks might help solve which market failures?

1. Anegative externalities of consumption: no; negative externalities of production: yes; over-consumption of demerit goods: yes
2. Bnegative externalities of consumption: yes; negative externalities of production: yes; over-consumption of demerit goods: no
3. Cnegative externalities of consumption: yes; negative externalities of production: no; over-consumption of demerit goods: yes
4. Dnegative externalities of consumption: yes; negative externalities of production: no; over-consumption of demerit goods: no

As printed in the paper