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The number of individual weekly ticket sales from UK National Lottery games operated by Camelot was 73 million in the financial year 2015-2016 - Edexcel - A-Level Economics A - Question 2 - 2018 - Paper 1
Question 2
The number of individual weekly ticket sales from UK National Lottery games operated by Camelot was 73 million in the financial year 2015-2016. The sale price of ea... show full transcript
Worked Solution & Example Answer:The number of individual weekly ticket sales from UK National Lottery games operated by Camelot was 73 million in the financial year 2015-2016 - Edexcel - A-Level Economics A - Question 2 - 2018 - Paper 1
Step 1
Calculate the weekly revenue received by Camelot after paying the tax to the government.
Answer
To determine the weekly revenue after tax, we begin by calculating the total revenue from ticket sales:
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Total Revenue Calculation:
Total Weekly Sales = 73 million tickets
Price per Ticket = £2
Total Revenue = 73,000,000 tickets × £2 = £146,000,000
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Tax Calculation:
Tax Revenue per Ticket = £0.24
Total Tax Revenue = 73,000,000 tickets × £0.24 = £17,520,000
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Net Revenue Calculation:
Net Revenue = Total Revenue - Total Tax Revenue
Net Revenue = £146,000,000 - £17,520,000 = £128,480,000
Thus, the weekly revenue received by Camelot after paying the tax to the government is £128.48 million.
Step 2
Explain the likely impact of the price increase of national lottery tickets on the demand for using gaming machines.
Answer
The price increase of national lottery tickets from £1 to £2 is likely to have a significant impact on the demand for using gaming machines. As the price of a substitute good (national lottery tickets) increases, the demand for related alternatives (gaming machines) typically increases as well.
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Cross Elasticity of Demand: The research indicates a cross elasticity of demand of 1.28, suggesting that gaming machines are a close substitute for national lottery tickets. If the price of national lottery tickets rises, consumers will likely shift their preference towards gaming machines.
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Demand Increase: The anticipated result is an increase in the demand for gaming machines. For instance, we can expect the demand for gaming machine usage to increase by approximately 128% in response to the 100% increase in the price of national lottery tickets.
This suggests that consumers are likely to reconsider their gambling expenditures, reallocating more resources towards gaming machines due to their relative affordability compared to the now more expensive national lottery tickets.
Step 3
The most likely reason for this grant is to ensure the provision of a public good.
Answer
The correct answer to this part of the question is C) provision of a public good. This is supported by the fact that flood defence schemes, such as the one completed at Broomhill Sands, act to protect the public at large by safeguarding homes, businesses, and the community from flood risks.
- Explanation of Incorrect Options:
- A) Exclusivity of Broomhill Sands: This is incorrect as public goods cannot be exclusive.
- B) Provision of a private good: This scheme benefits the community and is not for individual profit.
- D) Exclusion of Broomhill Sands: This does not apply, as the scheme aims to include and protect public areas from flooding.