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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 calculate the weekly revenue received by Camelot, we first need to determine the tax amount deducted from the sale price of each lottery ticket. The sale price is £2, and the tax is 24 pence, which can also be expressed as £0.24. Thus, the net price per ticket is:
Now, to find the total revenue received by Camelot, we multiply the net price by the number of tickets sold:
Thus, Camelot receives approximately £128.48 million weekly after paying the tax.
Step 2
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 have an impact on the demand for gaming machines, as both are substitutes for entertainment. According to the cross elasticity of demand reported to be 1.28, there is a positive relationship between the increase in price of national lottery tickets and the demand for gaming machines.
Specifically, if the price of the lottery ticket increases by 100%, the demand for gaming machines is expected to increase by 128%. This suggests that consumers may shift towards gaming machines as alternatives to potentially reduce their spending on more expensive lottery tickets.
Step 3
The most likely reason for this grant is to ensure the provision of a public good.
Answer
The £30 million grant from the National Lottery for the flood defence scheme at Broomhill Sands is primarily to ensure the provision of a public good, as it aims to protect the community and the environment. This also indicates that the benefits will be shared among the public, enhancing community resilience against flooding.
Therefore, option C, which states the provision of a public good, is the most accurate answer as it reflects the non-exclusion principle of public goods that benefit all residents in the affected areas.