Ho ho ho.

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Ho ho ho.

• Ba humbug

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Answers

• To your multi choice work orange sheet

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A
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D
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C

• Q4 Answer C (1)
• Definition of subsidy e.g. grant/money to firm
  (1) to increase supply (1)
• This leads to lower production costs (1) and a
  lower price (1).
• Also award annotation of diagram showing subsidy
  area (2).

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B
B

• A tax causes a leftward shift in the supply
  schedule. Therefore new quantity demanded is 40
  units.
• The total tax per unit is 7 (15 - 8) of which
  3 per unit is paid by the consumer and 4 by the
  producer.
• The total tax burden on the producer is,
  therefore, 4 x 40 160.

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C
C

• A subsidy of 20 per unit means that more can be
  supplied at each price e.g. what was supplied at
  80 (900 units) can now be supplied at 60.
• Therefore the new equilibrium price will be 50
  where quantity demanded is equal to quantity
  supplied (800 units).

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Create your own revision mind map of diagrams

• DS equilibrium
• Causes of shifts in D (and of S)
• Perfect elastic, perfectly inelastic, unitary
  elasticity demand
• Income elastic, inelastic zero elasticity
• Cross Price Elasticities for complements and
  substitutes
• Price elastic inelastic Supply
• Buffer stock diagram
• PPF
• Positive externality diagram
• Negative externality