6 marks
Case study · The market for housing
Explain the likely impact on producer surplus of an increase in the demand for housing. Use a diagram to illustrate your answer.
Diagram needed. Open the original question paper for the diagram
Specification point 1.2.8 · Theme 1
Consumer and producer surplus
How markets work · Introduction to markets and market failure
Questions tagged to this specification point
9 questions
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Long-form evaluation and discussion
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Data-response questions
Questions built around exam extracts
Short-answer questions
Focused calculations, explanations and diagrams
2 marks
ContextAn annual season ticket for a train journey between London and Reading is planned to increase from £5044 to £5 664 in 2023.
With reference to the information provided, calculate the percentage change in the price of an annual season ticket.
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2 marks
ContextAn annual season ticket for a train journey between London and Reading is planned to increase from £5044 to £5 664 in 2023.
Explain the likely impact of the increase in price of a season ticket on consumer surplus.
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2 marks
ContextThe consensus that diesel emissions are bad for health has led to many cities planning to ban diesel vehicles from their centres. The mayors of Paris, Mexico City, Madrid and Athens have said they intend to ban these vehicles by 2025.
Annotate the diagram to show the change in consumer surplus in the market for diesel vehicles, following the change in demand caused by the proposed 2025 ban in some city centres.
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1 mark
ContextThe British Broadcasting Corporation (BBC) is a TV broadcaster. It is financed through an annual TV licence fee of £145.50. At this fee level many TV owners benefit from consumer surplus.
Define the term ‘consumer surplus’.
Multiple-choice questions
Quick checks of economic understanding
A-level Paper 1, June 2023, Q4(c)Multiple choice
1 mark
ContextAn annual season ticket for a train journey between London and Reading is planned to increase from £5044 to £5 664 in 2023.
Which one of the following areas represents the change in producer surplus when a minimum price is imposed?
AFEPeP1
BFMP1
CGEPeP1
DGKP1
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A-level Paper 1, November 2020, Q1(b)Multiple choice
1 mark
ContextFuel duty is an excise tax imposed on the sale of petrol, included in the price paid by consumers, set at 58 pence per litre.
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?
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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A-level Paper 1, June 2017, Q3(c)Multiple choice
1 mark
ContextThe Indian government has introduced a subsidy on domestic cooking gas cylinders in the city of Mumbai. The diagram below shows the effect following the introduction of the subsidy. Price per cylinder (Rupees)
One effect of the subsidy is to increase:
Aconsumer surplus
Bmarket failure
Cpublic good provision
Dtax revenue
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AS Paper 1, June 2017, Q3(b)Multiple choice
1 mark
ContextIn 2015 the UK government cut subsidies for the installation of solar energy panels.
The most likely effect of cutting subsidies for the installation of solar panels is to:
Aincrease producer surplus
Bdecrease the provision of public goods
Cdecrease consumer surplus
Dincrease government expenditure
Question text © Pearson Edexcel, quoted for students' private study. Open the official papers and mark schemes from the links on each question.