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

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Question 14

Extract B: Supporting the Cultural Economy

To stimulate spending in the domestic tourism and heritage sectors, the Treasury announced that the rate of Value Added Tax (VAT) applied to attraction entry fees will be temporarily cut from the standard rate of 20% down to a reduced rate of 5%.

The original price of a family ticket to a national heritage theme park is £240 including VAT at the standard rate of 20%.

Using the information in Extract B, calculate the new price of the family ticket following the reduction in the VAT rate, assuming the tax savings are fully passed on to the consumer.

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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