More governments are imposing taxes on unhealthy food and drinks. Such taxes are usually regressive. Some of these governments are also increasing their spending on healthcare. In other countries healthcare is provided by the private sector. The number of state-owned enterprises is declining in a number of countries due to privatisation.

Mark scheme

Marking points from the official mark scheme (May/June 2018). The mark or mark type is shown in brackets.

1. [2] A tax that takes a lower percentage of the income of the rich/higher percentage of the income of the poor.
2. [1] A tax that falls more heavily on the poor.
3. [1] Disadvantages the poor/higher burden on the poor/higher rate for the poor.
4. [1] Social benefit includes both private and external benefits
5. [1] Healthcare also provides external benefits
6. [1] Example of private benefits identified as a private benefit e.g. profits of provider, wages of doctors, higher life expectancy of consumer (max 2).
7. [1] Examples of external benefits identified as external benefits/recognised as 3rd party impacts e.g. higher labour productivity, higher output, reduction in spread of diseases (max 2).
8. [1] To raise revenue
9. [1] to finance government spending/example of spending
10. [1] To discourage the consumption of certain products
11. [1] example/external costs
12. [1] To discourage the production of certain products
13. [1] example/external costs
14. [1] To discourage the consumption of imports
15. [1] improve the current account position on the balance of payments
16. [1] To redistribute income
17. [1] taxing the rich more
18. [1] To influence economic activity
19. [1] raising taxes to reduce total (aggregate) demand
20. [1] to control (demand-pull) inflation
21. [1] There may be more competition in the markets
22. [1] this may force down prices
23. [1] increase quality
24. [1] Firms will be influenced by the profit motive
25. [1] this may make them more responsive to changes in consumer demand
26. [1] State-owned enterprises may be slow in making decisions
27. [1] due to bureaucratic control
28. [1] may not respond quickly enough to consumer demands
29. [1] State-owned enterprises might have taken into account social costs and social benefits
30. [1] rather than just private costs and private benefits
31. [1] main goal may be economic welfare
32. [1] Private sector firms may merge
33. [1] form monopolies
34. [1] (use market power to) push up price
35. [1] they may become complacent
36. [1] lower quality
37. [1] Private sector may not have sufficient finance for large-scale projects
38. [1] consumers would lose out on the benefits