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1.2 How Markets Work
Question Paper
Course Edexcel A Level Economics A
Section 1. Introduction to Markets & Market Failure
Topic 1.2 How Markets Work
Difficulty Medium
Time allowed: 120
Score: /93
Percentage: /100
Page 1 of 18
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Question 1a
Fuel duty is an excise tax imposed on the sale of petrol, included in the price paid by consumers, set at 58 pence per litre.
(Source: https://www.gov.uk/tax-on-shopping/fuel-duty)
(a)
Draw a supply and demand diagram to show the incidence of a specific petrol tax on consumers and producers.
[1 mark]
Question 1b
(b)
The indirect tax on fuel is increased in a market in which the price elasticity of demand is −0.1. Which one of the following is the
most likely effect on consumer and producer surplus?
A. Consumer surplus and producer surplus both decrease
B. Consumer surplus and producer surplus both increase
C. Consumer surplus decreases and producer surplus increases
D. Consumer surplus increases and producer surplus decreases
[1 mark]
Page 2 of 18
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Question 2
Figure 2: Rail passenger kilometres travelled per year in the UK, billions
With reference to Figure 2, examine two possible factors which may have influenced demand for rail travel since 2008.
[8 marks]
Page 3 of 18
© 2015-2023 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers
1.2 How Markets Work
Question Paper
Course Edexcel A Level Economics A
Section 1. Introduction to Markets & Market Failure
Topic 1.2 How Markets Work
Difficulty Medium
Time allowed: 120
Score: /93
Percentage: /100
Page 1 of 18
© 2015-2023 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers
, Head to savemyexams.co.uk for more awesome resources
Question 1a
Fuel duty is an excise tax imposed on the sale of petrol, included in the price paid by consumers, set at 58 pence per litre.
(Source: https://www.gov.uk/tax-on-shopping/fuel-duty)
(a)
Draw a supply and demand diagram to show the incidence of a specific petrol tax on consumers and producers.
[1 mark]
Question 1b
(b)
The indirect tax on fuel is increased in a market in which the price elasticity of demand is −0.1. Which one of the following is the
most likely effect on consumer and producer surplus?
A. Consumer surplus and producer surplus both decrease
B. Consumer surplus and producer surplus both increase
C. Consumer surplus decreases and producer surplus increases
D. Consumer surplus increases and producer surplus decreases
[1 mark]
Page 2 of 18
© 2015-2023 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers
, Head to savemyexams.co.uk for more awesome resources
Question 2
Figure 2: Rail passenger kilometres travelled per year in the UK, billions
With reference to Figure 2, examine two possible factors which may have influenced demand for rail travel since 2008.
[8 marks]
Page 3 of 18
© 2015-2023 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers
