European countries have some of the highest GDP per capita levels in the world. They also have some of the highest life expectancy figures at birth – averaging 81 years compared with 71 years for the world as a whole. Life expectancy has steadily increased due to improved healthcare, decreased deaths from heart disease, cancer, diabetes and chronic respiratory disease. But a World Health Organisation (WHO) report warned that all of that progress could be overturned within a generation if the unhealthy lifestyle of many Europeans is not addressed. The report stated that Europe has the highest rates of smoking and alcohol consumption of any region in the world and is second for obesity after the Americas. This lifestyle will mean that life expectancy will decline over the next generation. Table 1.1 gives GDP per capita and health statistics for some European countries. Table 1.1: GDP and health statistics for selected countries Country | GDP per capita US dollars | % of adult population who smoke | % of population who are overweight | Average life expectancy at birth (years) --- | --- | --- | --- | --- Germany | 45615 | 32.9 | 54.8 | 80.9 Sweden | 45143 | 24.1 | 55.9 | 81.8 United Kingdom | 39136 | 22.3 | 63.4 | 81.0 France | 38850 | 30.6 | 60.7 | 82.1 Italy | 34757 | 24.9 | 58.8 | 82.9 Spain | 33763 | 32.1 | 60.9 | 82.6 Greece | 26098 | 46.8 | 60.5 | 81.3 Sources: World Bank, 2014 and WHO European Health Report, September 2015 The WHO suggested that governments should consider introducing sugar taxes, a minimum price for alcohol and also subsidies on fruit and vegetables. To try and limit smoking, the United Kingdom (UK) Government has conducted advertising campaigns warning of the dangers of smoking and banned smoking in public places. It has also put high taxes on alcohol and cigarettes. However, it has refused to place a tax on all sugar consumption and there are no minimum prices for alcohol. The WHO report attempted to measure well-being. Education, housing, health, sanitation and employment are all part of life satisfaction; how much money people have, it said, is not the major determinant. Happiness appears to require an annual income of US$10000, according to the WHO. People's sense of well-being is undermined if they earn less than that but does not increase if they earn more. "We do not quite understand why this is", said the WHO. “Why do people in poorer countries report higher satisfaction than in countries where incomes are higher?”

1. (a)With reference to Table 1.1, is there a positive correlation between smoking and life expectancy at birth?[3]
2. (b)Explain the possible effects on an economy if a government policy were to set a minimum price for a product such as alcohol.[4]
3. (c)Discuss whether the information supports the view that higher incomes increase consumer well-being.[6]
4. (d)Explain, according to indifference curve analysis, what happens to a consumer's satisfaction and demand as income rises. Consider whether the evidence in Table 1.1 about income levels, as shown by GDP per capita, and smoking, is sufficient to support that analysis.[7]