Extract F (lines 17–19) states: ‘Should the UK government promote a particular brand of e-cigarettes as a ‘healthy alternative’ to conventional cigarettes? Should the use of e-cigarettes be discouraged or has government intervention already gone far enough?’
Use the extracts and your knowledge of economics to evaluate whether the UK government should encourage, discourage or do nothing more to affect the use of e-cigarettes.
(AQA AS Level Economics Paper 1 June 2020)
Plan
- Intro: market failure is a misallocation of resources - this can be fixed with the help of government intervention - but there is also a chance of government failure
- P1: gov should discourage e-cigarattes and conventional cigarattes
- diagram: negative externalities in consumption
- evaluation: black market
- P2: gov should encourage e-cigarattes as they are an alternative to conventional cigarattes
- diagram: provision of information
- evaluation: information failure
- P3: gov should do nothing as gov intervention leads to gov failure, and that the price mechanism is able enough to solve problems
- diagram: excess demand diagram
- evaluation: price mechanism is only limited to solving the basic economic problem
- Judgement
- decision depends on the information available, and the risk of gov intervention
- with current level of information about the harmful effects, the gov should...