Question 12: 2020 H2 A level Discarded plastic and carbon emissions are among the biggest causes of pollution. The environmental damage to air and water runs into billions of dollars. This affects not only our health but also our food supply. ‘Adapted from. Kimberly Amadeo, How Air, Water and Plastic Pollution AMfect the Economy, 18 Jul 2019 (a) Explain how pollution leads to market failure. [10] Command Word Explain how ~ providé 2 well analysed reasons \ Start Point Pollution End Point Market Failure (Allocative Inefficiency) Content/Concepts Causes of market failure: Negative externalities in /Production/consumption, information failure — Context Y “Use the preamble to determine the (market to focus on (Plastics, Carbon emission) —» Consumption/production of plastics, factory production/power generation Question 12: 2020 H2 A level iscarded piastic and carbon emissions are among the biggest causes of pollution. The environmental damage to air and water runs into billons of dollars. This affects not only our health but also our food supply. ‘Adapted from: Kimberly Amadeo, How Air, Water and Plastic Pollution Affect the Economy, 18 Jul 2019 (a) Explain how pollution leads to market failure. Reason 1: Negative Externalities in power Reason 2: Information Failurein the generation (can use other examples) consumption/production of plastic (choose 1) * MEC: Air pollution 4d Microplastics (from improperly disposed { i plastic during consumption/production) resulting in higher | ingested by fish can cause harm to health of healthcare spending by Pe Pee nearby resident ese consumers/workers (Esp those living in ‘towns near the sea) en A ne A ‘Qp > Qs (overconsumption/overproduction) * Qp > Qs (Overproduction) . *5 steps + Diagram +5 steps + Diagram(b) Discuss the extent to which government policy measures aré likely to address this market failure. (ey 24 (15) / Command Word \. Discussion of policies - 10m EV: Extent to which policies are likely to address the market failure — 5m Start Point (Policy 1, Policy 2) End Point Address market failure / 4 Content/Concepts Taxes, Provision of Information Context (b) Discuss the extent to which government policy measures are likely to address this market failure. [15] Policy 1: Tax on energy production (How the pole works) \ + Impose tax = MEC @Qs * Increase COP > increases MPC > MPC curve shifts leftwards + New Qp where MP\ + Qp falls to Qs Intermediate EV (limitations) = Unable to measure MEC accurately, MPC might not increase sufficiently DWL might stil remain (or be even greater) if tax is too high Policy 2: Provision of Information on consumption/production of plastics )- Consumers/producers more aware of actual cost + Increase MPC, ceed * New Qp where MPC, 1B perceived, + Qp falls to. Qs perceived Intermediate EV (limitations) - Takes time to change mindsets - Perceived MPC might not shift left sufficiently in the SR = Qp might not fall to Qs in the short run “Link back to why new Qp might not = Qs(b) Discuss the extent to which government policy measures are likely to address this market failure. Policy 4: Tax on energy production (ow the pokey werk) + Impose tax= MEC @Qs * Increase COP > increases MPC -> MPC curve shifts leftwards + New Qp where MPC’=MPB + Qp falls to Qs Intermediate EV (limitations) Unable to measure MEC accurately, MPC might increase too much (MPC" instead of MPC’) Qi fall to 0,” instead of Os. DWL might be greater if tax is too high Worsens the market failure instead Summative EV [15] yw ec! ‘ Costs/benefits Msc= MPC’ Mpc Ge 9806 ap Quantity of power Oy! generation *Link back to why new Qp might not = Qs (use diagrams where ( ernment policies are likely to be effective in addressing the market ilure brought about by pollution from plastic disposals and carbon Ymissions to a large extent Nonetheless, problems such pollution tends to be(borderless ti once generated, pollution affects everyone regardless of borders @ an individual government's policies is unlikely to be sufficient > requires a concerted effort across industries and governments to effectively address the problem. **You must answer the question!!**Key Takeaways 1. If the market is not explicit, determine your own markets according to context given in preamble oo! : : / AY, 2. Always link your analysis back to answering the question a. Best done so through reference to diagrams Le WeV SS b. Causes of Market Failure (Why Qp # Qs) v ay” c. Policies to address Market Failure (How to make Qp = Qs) 3. Ensure coherence between parts (a) and (b) ra Hs Me FAQ ta Lo Sev 1. How many policies should | give? -.2 well developed policies + 1 cursory (if time permits) 2. Can!do my all my Evs right at the end? - It is possible but we suggest thd you do intermediate EVs as recommended by a a ignpost your EV clearly (However, overall, in conclusion...) ai “sh address the question explicitly a