Skip to content

Course home

Sign up

1.8 The market mechanism, market failure and government intervention in markets

EasyMediumHard
123456789101112131415161718192021222324252627282930313233343536373839404142434445464748495051525354555657585960616263646566676869707172737475767778798081828384858687888990919293949596979899100101102103104105106107108109110111112113114115116117118119
Question 96

Extract D: Percentage of different age groups consuming disposable vapes weekly, 2023

Age GroupLow Consumption (<1 vape/week) (%)Moderate Consumption (1–3 vapes/week) (%)High Consumption (4+ vapes/week) (%)
11–15503218
16–17354223
18–24384022
25–39602812
40+85123

Extract E: The cost of disposable vape consumption

Without robust regulation or targeted fiscal measures, the volume of single-use disposable vapes consumed at free-market prices is unsustainably high. The external costs of this consumption to the wider environment and society greatly exceed the private costs incurred by individual users. While private costs are confined to the purchase price and individual respiratory or cardiovascular health risks, the external costs are severe. These include the environmental degradation caused by millions of discarded lithium-ion batteries and non-biodegradable plastics in landfills, toxic chemical leakages into ecosystems, and elevated public healthcare (NHS) expenditures to treat nicotine addiction and lung conditions in adolescents. The financial burden of environmental cleanup and healthcare provision falls heavily on tax-paying citizens.

Extract F: Regional proposals to curb disposable vape use

To combat the escalating public health and environmental crisis, regional authorities have proposed radical regulatory frameworks targeting cheap, brightly-coloured disposable vapes. Foremost among these proposals is the introduction of a statutory minimum retail price per unit. Currently, discount shops and convenience stores sell disposable vapes for as little as £3, using them as 'loss leaders' to attract budget-conscious young consumers who frequently buy other high-margin goods.

Additionally, policy proposals suggest a ban on sweet, child-friendly flavours (such as 'gummy bear' and 'cotton candy'), a complete prohibition of checkout displays, and stricter penalties for retailers selling to under-18s. Proponents of these measures argue that price-based controls are vital to curb impulse purchasing among price-sensitive youth. Conversely, retail trade groups warn that high price floors will drive consumers toward illicit counterfeit markets and disproportionately harm independent shopkeepers reliant on vape sales.

Using the data and your economic knowledge, assess the view that a minimum price law provides the best way of tackling the problem of over-consumption of disposable vapes.

[25]
Markscheme

1.8 The market mechanism, market failure and government intervention in markets Questions

  1. A Level
  2. /Economics
  3. /1.8 The market mechanism, market failure and government intervention in markets

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.

Question bank