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10 questions on Indirect Taxes and Subsidies (Edexcel specification 1.2.9) from the A-Level Economics papers, 2017–2025. Every question links to the official mark scheme at the page its answer begins on.
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Evaluate the likely microeconomic effects of a reduction in subsidies to farmers of animal products (Figure 1 and Extract B, line 14). Use a relevant diagram to support your answer.
One of two options in Section B — candidates answered this or the other.
Evaluate the likely microeconomic effects of an increase in indirect tax on animal products (Figure 2 and Extract A, line 17). Use a relevant diagram to support your answer.
One of two options in Section B — candidates answered this or the other.
Using a demand and supply diagram, explain the cost of a subsidy on the market for cooking oil to the Indian government (Extract E, line 6).
Evaluate the likely impact of a tax on plastic food-packaging. Use a diagram to support your answer.
One of two options in Section B — candidates answered this or the other.
With reference to Extract C, discuss the proposed government subsidy to prevent Thomas Cook from reaching its shut-down point.
3.3.4 Profits and Losses · 1.2.9 Indirect Taxes and Subsidies
Refer to Figure 1. Explain the likely effect of the change in subsidy levels between 2017 and 2018 on rail fares. Include a supply and demand diagram in your answer.
Evaluate the likely microeconomic and macroeconomic effects of imposing a tax on HFSS foods.
One of two options in Section A — candidates answered this or the other.
Examine the advantages of using an indirect tax as a means of reducing the use of disposable coffee cups.
Evaluate the impact of government intervention in the cigarette market.
One of two options in Section B — candidates answered this or the other.
1.4.1 Government Intervention in Markets · 1.2.9 Indirect Taxes and Subsidies
In 2015 a report by Public Health England recommended the imposition of a 20% tax on the sale of soft drinks that contain high levels of sugar. Evaluate the likely microeconomic effects of such a tax.
One of two options in Section C — candidates answered this or the other.
1.2.9 Indirect Taxes and Subsidies · 1.3.2 Externalities · 1.4.1 Government Intervention in Markets
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