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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
(a) Calculate the weekly revenue received by Camelot after paying the tax to the government.
Answer
To calculate the weekly revenue after tax, we first determine the amount received from ticket sales before tax.
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Calculate the total revenue from ticket sales:
Total Sales = Price per ticket × Number of tickets sold
= £2 × 73,000,000 = £146,000,000
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Calculate the tax amount:
Tax per ticket = £0.24
Total Tax = £0.24 × 73,000,000 = £17,520,000
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Determine the revenue after tax:
Revenue after tax = Total Sales - Total Tax
= £146,000,000 - £17,520,000 = £128,480,000
Thus, the weekly revenue received by Camelot after paying the tax to the government is approximately £128.48 million.
Step 2
(b) Explain the likely impact of the price increase of national lottery tickets on the demand for using gaming machines.
Answer
The increase in the price of national lottery tickets from £1 to £2 is likely to lead to an increase in demand for using gaming machines. This is due to several factors:
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Substitutes: Since gaming machines are considered substitutes for lottery tickets, an increase in the price of tickets could make gaming machines more attractive to consumers seeking alternative forms of entertainment.
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Cross Elasticity: With a cross elasticity of 1.28, it indicates that a 1% increase in the price of lottery tickets would lead to a 1.28% increase in the demand for gaming machines. This demonstrates that they are close substitutes.
Therefore, as the cost of lottery tickets rises, consumers may shift their spending towards gaming machines, resulting in increased demand.
Step 3
(c) The most likely reason for this grant is to ensure the:
Answer
The correct answer is C) provision of a public good.
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Public Good Characteristics: A public good is characterized by being non-excludable and non-rivalrous, meaning that one person's use does not reduce availability for others.
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Flood Defence Scheme: The flood defence scheme at Broomhill Sands is aimed at protecting the community and environment, benefiting all residents and businesses in the area, which aligns with the characteristics of a public good.
Thus, the grant's purpose was likely to ensure the provision and maintenance of this public infrastructure project.