: Pearson Edexcel past-paper questions pack

Indirect taxes and subsidies

Past-paper questions pack

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Class
Date set
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Questions are numbered; the mark schemes (the answer key) follow on separate pages so the question pages can be handed out alone. www.economicsaleveltutor.com

Pearson Edexcel AS and A-level Economics past-paper questions since 2016 · 23 parts · mark schemes follow the questions · www.economicsaleveltutor.com · Questions and mark schemes © Pearson Edexcel

1. June 2025 · AS Paper 1 · Q6(f) · 20 marks · AO1=4,AO2=4,AO3=6,AO4=6

(f) 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. (20)

2. June 2025 · AS Paper 1 · Q6(g) · 20 marks · AO1=4,AO2=4,AO3=6,AO4=6

(g) 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. (20)

3. June 2025 · Paper 3 · Q2(a) · 5 marks · AO1=2,AO2=2,AO3=1

(a) 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). (5)

4. June 2024 · AS Paper 1 · Q6(f) · 20 marks · AO1=4,AO2=4,AO3=6,AO4=6

(f) Evaluate the likely impact of a tax on plastic food-packaging. Use a diagram to support your answer. (20)

5. November 2021 · Paper 1 · Q4(b) · 2 marks · AO2=2

(b) Calculate the value of the government subsidy necessary for this production to cover all of its costs. (2)

6. October 2020 · Paper 1 · Q1(a) · 4 marks · AO1=2,AO2=2

(a) Draw a supply and demand diagram to show the incidence of a specific petrol tax on consumers and producers. (4)

7. October 2020 · Paper 1 · Q1(b) · 1 marks · AO3=1

(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? (1) 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

8. October 2020 · AS Paper 1 · Q3(a) · 1 marks ·

(a) In the diagram below, the government grants a subsidy to energy suppliers to install loft insulation. This shifts the market supply curve for loft insulation from Supply1 to Supply2. Price of loft insulation Supply1 Supply2 J P1 K P2 L P3 M P4 Demand O Q1 Q2 Quantity of loft insulation The total amount spent by the government on subsidies is represented by the area: (1) A OP1JQ2 B OP3LQ2 C P3P1JL D P4P2KM

9. October 2020 · AS Paper 1 · Q4(a) · 1 marks ·

(a) In the diagram below, the government imposes a specific tax on a product. This shifts the supply curve from Supply1 to Supply2. Price Supply2 H Supply1 P1 J P2 K P3 Demand O Q1 Q2 Quantity The government’s tax revenue is shown by the area: (1) A OP1HQ1 B P2P1HJ C P3P1HK D P3P2JK

10. October 2020 · AS Paper 1 · Q4(b) · 3 marks · AO1=1,AO2=1,AO3=1

(b) Using an example, explain why the government imposes specific taxes on many goods and services. (3)

11. October 2020 · Paper 1 · Q6(a) · 5 marks · AO1=1,AO2=1,AO3=3

(a) 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. (5)

12. June 2019 · AS Paper 1 · Q4(a) · 1 marks · AO2=1

(a) The amount of VAT paid per year from energy bills by an average household in 2016 was: (1) A £53.50 B £214.00 C £1 019.00 D £1 123.50

13. June 2019 · AS Paper 1 · Q4(b) · 2 marks · AO2=2

(b) On the diagram below annotate the effect of a rise in VAT on the market for household energy use. (2) Average annual household bill (£) S P1 D 0 Q1 Quantity of energy per household

14. June 2019 · AS Paper 1 · Q4(c) · 1 marks · AO1=1

15. June 2019 · Paper 3 · Q1(e) · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

(e) Evaluate the likely microeconomic and macroeconomic effects of imposing a tax on HFSS foods. (25)

16. June 2018 · Paper 1 · Q2(a) · 2 marks · AO2=2

(a) Calculate the weekly revenue received by Camelot after paying the tax to the government. You are advised to show your working. (2)

17. June 2017 · AS Paper 1 · Q3(a) · 1 marks · AO1=1

18. June 2017 · Paper 1 · Q3(a) · 2 marks · AO2=2

(a) Calculate the total domestic cooking gas subsidy paid daily by the Indian government. You are advised to show your working. (2)

19. June 2017 · AS Paper 1 · Q3(b) · 1 marks · AO1=1

(b) The most likely effect of cutting subsidies for the installation of solar panels is to: (1) A increase producer surplus B decrease the provision of public goods C decrease consumer surplus D increase government expenditure

20. June 2017 · Paper 1 · Q3(b)(i) · 1 marks ·

(b) Calculate the percentage share of the total subsidy received by: (i) consumers (1)

21. June 2017 · Paper 1 · Q3(b)(ii) · 1 marks ·

(b) Calculate the percentage share of the total subsidy received by: (ii) producers (1)

22. June 2017 · AS Paper 1 · Q3(c) · 2 marks · AO2=2

(c) Annotate the diagram below to show the effect of removing the solar panel installation subsidy on the equilibrium price and quantity. (2) Solar panel installation market diagram Price of solar panels supply Pe demand Quantity of 0 solar panels Qe

23. June 2017 · Paper 1 · Q7 · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

7 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.

Mark schemes

1. June 2025 · AS Paper 1 · Q6(f)

2. June 2025 · AS Paper 1 · Q6(g)

3. June 2025 · Paper 3 · Q2(a)

4. June 2024 · AS Paper 1 · Q6(f)

5. November 2021 · Paper 1 · Q4(b)

6. October 2020 · Paper 1 · Q1(a)

7. October 2020 · Paper 1 · Q1(b)

8. October 2020 · AS Paper 1 · Q3(a)

9. October 2020 · AS Paper 1 · Q4(a)

10. October 2020 · AS Paper 1 · Q4(b)

11. October 2020 · Paper 1 · Q6(a)

12. June 2019 · AS Paper 1 · Q4(a)

13. June 2019 · AS Paper 1 · Q4(b)

14. June 2019 · AS Paper 1 · Q4(c)

15. June 2019 · Paper 3 · Q1(e)

16. June 2018 · Paper 1 · Q2(a)

17. June 2017 · AS Paper 1 · Q3(a)

18. June 2017 · Paper 1 · Q3(a)

19. June 2017 · AS Paper 1 · Q3(b)

20. June 2017 · Paper 1 · Q3(b)(i)

21. June 2017 · Paper 1 · Q3(b)(ii)

22. June 2017 · AS Paper 1 · Q3(c)

23. June 2017 · Paper 1 · Q7