Indirect taxes & subsidies

(a) Using a demand and supply diagram, explain the cost of a subsidy on the market for cooking oil to the Indian government (Extract E, line 6).

(b) Examine two advantages of using the Human Development Index (HDI) to measure the level of economic development in India.

(c) With reference to Extract F, discuss the problems that might be involved with the buffer stock system in India.

EITHER

(d) Evaluate the microeconomic and macroeconomic reasons for the fall in poverty in India.

Using a demand and supply diagram, explain the cost of a subsidy on the market for cooking oil to the Indian government (Extract E, line 6).

Examine two advantages of using the Human Development Index (HDI) to measure the level of economic development in India.

With reference to Extract F, discuss the problems that might be involved with the buffer stock system in India.

EITHER

Evaluate the microeconomic and macroeconomic reasons for the fall in poverty in India.

Evaluate the microeconomic and macroeconomic effects of rapid increases in population in India.

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Fuel duty is an excise tax imposed on the sale of petrol, included in the price paid by consumers, set at 58 pence per litre.

(Source: https://www.gov.uk/tax-on-shopping/fuel-duty)

Draw a supply and demand diagram to show the incidence of a specific petrol tax on consumers and producers.

The indirect tax on fuel is increased in a market in which the price elasticity of demand is −0.1. Which one of the following is the most likely effect on consumer and producer surplus?

Fuel duty is an excise tax imposed on the sale of petrol, included in the price paid by consumers, set at 58 pence per litre.

(Source: https://www.gov.uk/tax-on-shopping/fuel-duty)

Draw a supply and demand diagram to show the incidence of a specific petrol tax on consumers and producers.

The indirect tax on fuel is increased in a market in which the price elasticity of demand is −0.1. Which one of the following is the most likely effect on consumer and producer surplus?

Refer to Figure 1. Explain the likely effect of the change in subsidy levels between 2017 and 2018 on rail fares.

Include a supply and demand diagram in your answer.

With reference to Figure 2, examine two possible factors which may have influenced demand for rail travel since 2008.

Assess whether complete nationalisation of the rail industry might protect employees.

With reference to Extract A, paragraph 3, discuss whether the rail network can be considered to be a natural monopoly.

Discuss the likely benefits of price discrimination to rail passengers. Use a diagram to support your answer.

Refer to Figure 1. Explain the likely effect of the change in subsidy levels between 2017 and 2018 on rail fares.

Include a supply and demand diagram in your answer.

With reference to Figure 2, examine two possible factors which may have influenced demand for rail travel since 2008.

Assess whether complete nationalisation of the rail industry might protect employees.

With reference to Extract A, paragraph 3, discuss whether the rail network can be considered to be a natural monopoly.

Discuss the likely benefits of price discrimination to rail passengers. Use a diagram to support your answer.

With reference to Figure 1 and Extract A, explain what is meant by a ‘highly concentrated’ market for potato crisps (Extract A, lines 2–3).

Apart from changes in indirect taxes and subsidies, examine two causes of income inequality within a developed economy such as the UK.

In Extract A, lines 15–16, it was suggested that some firms may respond to the advertising ban by cutting the prices of their products.

Using game theory and the information provided in Figure 1 and Extract A, discuss the effects on firms of cutting prices in an oligopolistic market.

EITHER

Evaluate the microeconomic and macroeconomic effects of increased government spending on education to promote healthy eating in the UK.

Evaluate the likely microeconomic and macroeconomic effects of imposing a tax on HFSS foods .

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The number of individual weekly ticket sales from UK National Lottery games operated by Camelot was 73 million in the financial year 2015–2016.

The sale price of each lottery ticket was £2. This figure included 24 pence of tax revenue on each ticket sold.

Calculate the weekly revenue received by Camelot after paying the tax to the government. You are advised to show your working.

Research conducted for HMRC estimated the cross elasticity of demand for using gaming machines to be 1.28 in response to changes in the price of national lottery tickets.

(Source: https://www.gov.uk/government/uploads/system/uploads/ attachment_data/file/322845/report313.pdf)

In October 2013 Camelot increased the price of a national lottery ticket from £1 to £2.

Explain the likely impact of the price increase of national lottery tickets on the demand for using gaming machines.

In 2016 a coastal flood defence scheme was completed at Broomhill Sands in Kent, protecting people, homes and businesses. A £30 million grant from the National Lottery paid for the scheme.

(Source: https://www.gov.uk/government/news/30-million-project-set-to-reduce-flood-risk-in-kent)

The most likely reason for this grant is to ensure the:

With reference to Figure 1, briefly explain the market structure that best describes the UK branded coffee shop market.

With reference to Figure 3 and other information provided, discuss the price and non-price strategies that Starbucks may use to increase profitability.

Examine the advantages of using an indirect tax as a means of reducing the use of disposable coffee cups.

EITHER

Evaluate the microeconomic and macroeconomic factors that may influence Starbucks’ decision whether to expand in a particular country.

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of increased UK demand for coffee at branded coffee shops.

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Calculate the total domestic cooking gas subsidy paid daily by the Indian government. You are advised to show your working.

Calculate the percentage share of the total subsidy received by:

consumers

producers

One effect of the subsidy is to increase:

In 2015 a report by Public Health England recommended the imposition of a 20% tax on the sale of soft drinks that contain high levels of sugar.

Evaluate the likely microeconomic effects of such a tax.