EDEXCEL PAPER 3 ECONOMICS 100%
VERIFIED ANSWERS
GUARANTEED PASS!
GRADED A+
QUESTIONS AND ANSWERS
Micro effects:. ANSWER - P - price
O - output
P - profits
S - structure of markets
I - inefficiency
C - competition
L - labour markets
E - externalities
Macro effects:. ANSWER - D - development
I - inflation
G - growth
, E - employment
S - structure of economy
T - trade balance
I - inequality
F - fiscal balance
25 mark essay question on - The possible micro and macro economic effects of
increasing VAT in the UK :. ANSWER - - Define the key term
- Try and use application e.g. VAT in UK is 20%.
- Some things are exempt from VAT.
MICRO 1
- Increase retail prices - if passed onto consumer
- Rise in VAT causes a pivotal shift in the supply curve, and if demand is price inelastic
suppliers can raise prices without a big loss to sales.
- BUT some firms will keep prices lower in an attempt to gain market share. This
depends on how profitable they are.
In an oligopoly for example protecting market share is a key objective.
MICRO 2
- May lead to an increase inequality due to regressive tax on low income families.
- It has a regressive effect - takes 11% of disposable income in the poorest 20% of
income distribution, yet only 5% of income in higher earners.
- Depends on whether there is any change to the scoop of VAT - some exempt and if its
private schools for example, may be progressive.
VERIFIED ANSWERS
GUARANTEED PASS!
GRADED A+
QUESTIONS AND ANSWERS
Micro effects:. ANSWER - P - price
O - output
P - profits
S - structure of markets
I - inefficiency
C - competition
L - labour markets
E - externalities
Macro effects:. ANSWER - D - development
I - inflation
G - growth
, E - employment
S - structure of economy
T - trade balance
I - inequality
F - fiscal balance
25 mark essay question on - The possible micro and macro economic effects of
increasing VAT in the UK :. ANSWER - - Define the key term
- Try and use application e.g. VAT in UK is 20%.
- Some things are exempt from VAT.
MICRO 1
- Increase retail prices - if passed onto consumer
- Rise in VAT causes a pivotal shift in the supply curve, and if demand is price inelastic
suppliers can raise prices without a big loss to sales.
- BUT some firms will keep prices lower in an attempt to gain market share. This
depends on how profitable they are.
In an oligopoly for example protecting market share is a key objective.
MICRO 2
- May lead to an increase inequality due to regressive tax on low income families.
- It has a regressive effect - takes 11% of disposable income in the poorest 20% of
income distribution, yet only 5% of income in higher earners.
- Depends on whether there is any change to the scoop of VAT - some exempt and if its
private schools for example, may be progressive.
