A government introduces a tax on air travel to reduce emissions. Estimates for two groups of households are shown below.
| Household group | Average annual income | Average annual increase in travel costs | Estimated fall in air travel |
|---|---|---|---|
| Lower-income households | £18,000 | £90 | 5% |
| Higher-income households | £60,000 | £240 | 15% |
Using the data, explain why policymakers might reach different conclusions about the effects of this tax.
127 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.