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

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Question 13

Weekly sales of artisan cupcakes are 30,000 30,000\,30,000 and the market price is £2.50 £2.50\,£2.50 per cupcake. The government introduces a new specific indirect tax of 40p40\text{p}40p per cupcake. Sales fall to 25,000 25,000\,25,000 a week and the market price rises to £2.75 £2.75\,£2.75 per cupcake.

The share of the total weekly tax that is borne by cupcake producers is

A

£3,750£3,750£3,750

B

£4,500£4,500£4,500

C

£6,250£6,250£6,250

D

£10,000£10,000£10,000

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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