Edexcel A Level Economics B
Edexcel A Level Economics B 1.5 Government Intervention Exam Questions
Free Edexcel A Level Economics B exam questions on 1.5 Government Intervention, with mark schemes. Covers taxes, subsidies, regulation, price controls and government failure.
1.5 Government Intervention exam questions
1 question pack of real past exam questions with its mark scheme. Answer every question without notes, then mark your answers line by line against the mark scheme.
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A Level Economics Flashcards
Every answer is written in mark scheme wording, so you learn exactly what examiners give marks for. Pick your exam board, then test yourself with the questions on this page.
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About Edexcel A Level Economics B 1.5 Government Intervention
This part of 1.5 evaluates how governments correct market failure. Essay questions expect you to weigh up different policies and the risk of government failure.
What you need to know
- Indirect taxes Raise the price of goods with negative externalities, shifting supply left towards the social optimum.
- Subsidies Lower the price of goods with positive externalities, shifting supply right.
- Regulation and information Laws, standards, bans and information campaigns to change behaviour.
- Government failure When intervention leads to a net welfare loss, for example through unintended consequences or information gaps.
Common mistakes in 1.5 Government Intervention
- Ignoring PED when evaluating an indirect tax.
- Describing government failure as a policy simply not working.
- Forgetting the opportunity cost of subsidies.
Try three 1.5 Government Intervention exam-style questions
1. Explain one advantage of a subsidy for renewable energy. (2 marks)
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It lowers the cost of producing renewable energy (1), so supply rises and more is produced, moving towards the socially optimal output (1).
2. Explain one reason why a tax on sugary drinks might not reduce consumption greatly. (2 marks)
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Demand may be price inelastic because of habit or few close substitutes (1), so the price rise causes only a small fall in quantity demanded (1).
3. Define government failure. (2 marks)
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When government intervention (1) leads to a net welfare loss compared with the free market outcome (1).
1.5 Government Intervention FAQs
What does Edexcel A Level Economics B 1.5 Government Intervention cover?
Indirect taxes, subsidies, regulation, price controls, information provision and government failure.
How do I evaluate a policy?
Consider elasticity, cost, enforcement, unintended consequences and alternative policies.
What are examples of government failure?
Black markets after a ban or price control, regulatory capture, and taxes set at the wrong level because external costs are hard to value.
Revise this topic with flashcards: A Level Economics Flashcards, with mark scheme answers for Anki and Quizlet.
