A-level Paper 1, November 2020Markets and Business Behaviour
A-level Paper 1, November 2020, Q1(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?
Multiple choice1 mark
Context
Fuel duty is an excise tax imposed on the sale of petrol, included in the price paid by consumers, set at 58 pence per litre.
AConsumer surplus and producer surplus both decrease
BConsumer surplus and producer surplus both increase
CConsumer surplus decreases and producer surplus increases
DConsumer surplus increases and producer surplus decreases
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