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3.8 Limitations of markets

3.8 Limitations of markets

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Question 5

Demand for a harmful product is highly price inelastic. Why may a tax have only a small effect on consumption?

[1]
A

Quantity demanded responds only slightly to the higher price

B

Supply becomes perfectly elastic whenever tax is imposed

C

Consumers receive a subsidy equal to the tax

D

The tax shifts demand right

Markscheme

3.8 Limitations of markets Questions

  1. GCSE
  2. /Economics
  3. /3.8 Limitations of markets

31 exam-style questions on OCR GCSE Economics 3.8 Limitations of markets, covering 3.8.1 Positive and negative externalities, 3.8.2 Policies to correct externalities, 3.8.3 Impact of externality policies, and 3.8.4 Costs and benefits of externality policies. Each one has a worked solution and a mark scheme showing where the marks go.

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