Which one of the following is an example of a negative externality?
From Paper 1: How markets work
16.12 marks
Extract B (data are illustrative, written for this paper): Sugary drinks are linked to obesity and tooth decay, costing the NHS an estimated £6 billion a year in obesity-related care. In 2018 the UK introduced a Soft Drinks Industry Levy on drinks with high sugar content. Many manufacturers reduced the sugar in their drinks. Sales of the highest-sugar drinks fell by about 50%, while some consumers switched to sugary snacks instead.
Define 'market failure'.
From Paper 1: How markets work
16.22 marks
Identify two external costs of the consumption of sugary drinks.
From Paper 1: How markets work
16.33 marks
Explain why the free market leads to over-consumption of sugary drinks.
From Paper 1: How markets work
16.44 marks
Explain how the sugar levy is intended to reduce consumption of high-sugar drinks. You may use a diagram.
From Paper 1: How markets work
16.54 marks
Explain one other way the government could reduce consumption of sugary drinks.
From Paper 1: How markets work
16.66 marks
Analyse the possible unintended consequences of taxing sugary drinks.
From Paper 1: How markets work
16.79 marks
Evaluate whether the Soft Drinks Industry Levy has been successful in correcting market failure.
Score 0 / 31 · 0 of 8 marked
This paper is written by Plasmo in the style of the AQA GCSE Economics exam. It is not a past paper and is not produced or endorsed by the exam board.