A regional transit authority operates a non-profit rural bus service to support isolated communities. The service currently provides 84,000 passenger journeys per year. At this level of output, the average cost of providing a single journey is £4.25, while the fare charged to passengers is £1.75 per journey.
Calculate the total annual government subsidy required by the transit authority to cover the entire operating deficit of this service.
22 exam-style questions on Edexcel A A Level Economics 1.2.9 Indirect taxes and subsidies. Each one has a worked solution and a mark scheme showing where the marks go.