In 2026, the Government is considering a new fiscal levy on ultra-processed foods (UPFs), aiming to address rising rates of chronic metabolic diseases. Behavioural economists argue that price-based interventions alone may not significantly alter purchasing habits due to strong consumer preferences, habituation, and cognitive biases. By 2045, illnesses linked to high UPF diets are projected to affect 55% of the adult population, causing substantial pressure on healthcare systems.
Evaluate the view that a tax on ultra-processed foods (UPFs) is the most effective government policy to correct the market failures arising from their overconsumption.
378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.