PARAGRAPH 1- "INTRODUCTION"1. Start with your written definitions and add relevant examples (similar to
Q1 or
Q3). If you've chosen your question sensibly, you'll be able to define merit goods/de-merit goods and private/social/external benefits/costs. This targets your
knowledge and
application marks:
2. Add in an explicit reference to the extract, either as an example linked to your definition or as a means of introducing your main argument.
3. Introduce the concept of market failure as the key theme running through your essay i.e good X is underprovided or overprovided.
PARAGRAPH 2- "MARKET FAILURE"1. Draw the relevant externalities diagram depending on whether the question refers to a merit/de-merit good. Explain what this shows.
2. Evaluate this point. Is the good in question really a merit/de-merit good? Don't forget you want to be making at least one reference to the extracts per paragraph.
PARAGRAPH 3- "CORRECTING MARKET FAILURE"1. How can the government address this market failure? If the good is a de-merit good, the government will impose a tax; if it is a merit good, the government will impose a subsidy. Draw the relevant diagram.
2. Evaluate this point. Talk about the significance of elasticities i.e if demand is inelastic, the size of the tax/subsidy will have to be greater to bring about a given change in quantity. You can also draw a diagram to illustrate this.
PARAGRAPH 4- "ALTERNATIVE FORMS OF GOVERNMENT INTERVENTION"1. What else could the government do to address this market failure? Education/awareness, regulation, permits?
2. Evaluate this point. Introduce the concept of government failure- this is when the government intervenes but fails to restore the socially optimal quantity. Can use this as an evaluation point for any form of government intervention.
PARAGRAPH 5- "OTHER" (OPTIONAL)1. Include anything else that you haven't already mentioned here. If you've covered all the bases, can skip to your concluding remarks (see below).
2. Evaluate this point.
PARAGRAPH 6- "CONCLUDING REMARKS"•
Recap evaluative points "government could do this, but it depends on X, Y and Z."
•
Can introduce equity vs efficiency arguments here
I flesh this out further on my website where I've also got an example of a full mark response.
Hope this helps,
Tom (
IDK-tuition.com, free online economics resources and videos)