Extract A: In 2018 the UK introduced the Soft Drinks Industry Levy, a tax paid by manufacturers on drinks with more than 5 g of sugar per 100 ml (18p per litre) and a higher rate above 8 g (24p per litre). Sales of drinks liable for the levy fell from 2.20 billion litres in 2015 to 1.54 billion litres in 2019, while sales of low- and no-sugar drinks rose by over 30%.
Extract B: Many manufacturers cut the sugar content of their drinks before the levy started so they would not have to pay it. Critics argue that the levy is regressive and that people simply buy sugar from other foods instead. Supporters point to falling sugar intake among children and say that the revenue (about £300 million a year) funds school sport.
Extract C: Obesity costs the NHS an estimated £6.5 billion a year. Economists argue that consumers underestimate the long-term health costs of sugary drinks, that advertising targets children and that information failure is widespread. Alternatives to taxation include advertising bans, minimum unit pricing, regulation of sugar content and education campaigns.
From Paper 1: Markets and market failure
425 marks
Using the extracts and your knowledge of economics, evaluate whether taxing sugary drinks is the best way to correct the market failure associated with them.
From Paper 3: Economic principles and issues
31 mark
Price rises from £10 to £12 and quantity demanded falls from 100 to 80. PED is:
From Paper 3: Economic principles and issues
41 mark
An inferior good has income elasticity of demand that is:
From Paper 3: Economic principles and issues
51 mark
Two goods are complements. Their cross elasticity of demand is:
From Paper 3: Economic principles and issues
201 mark
Automatically enrolling workers into a pension scheme is an example of:
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This paper is written by Plasmo in the style of the AQA A-Level Economics exam. It is not a past paper and is not produced or endorsed by the exam board.