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

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Question 47

Monthly sales of locally brewed organic kombucha are 80 000 bottles and the market price is £3.20 per bottle. The government introduces a new specific indirect tax of 60p per bottle. Sales fall to 60 000 bottles a month and the market price rises to £3.55 per bottle.

The share of the total monthly tax that is borne by kombucha producers is

A

£15 000

B

£20 000

C

£21 000

D

£36 000

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.

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