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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 received by Camelot after paying the tax, we first compute the total sales revenue before tax. The sale price is £2, and the total number of tickets sold is 73 million. Therefore, the total revenue before tax is given by:
Next, we need to subtract the tax revenue. The tax per ticket is £0.24, thus total tax revenue can be calculated as follows:
Now, subtract the tax revenue from the total revenue:
Hence, the weekly revenue received by Camelot after paying the tax 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 price increase of national lottery tickets from £1 to £2 is expected to influence the demand for gaming machines due to their cross elasticity of demand being 1.28. This means that the demand for gaming machines is positively sensitive to changes in the price of national lottery tickets.
As the price of lottery tickets rises, consumers may substitute away from purchasing lottery tickets since they face higher prices and seek alternative forms of entertainment or gambling, such as gaming machines. The increase in demand for gaming machines may be significant, potentially seeing an increase of around 128% in response to the higher price of lottery tickets. This indicates that these goods serve as close substitutes.
Step 3
(c) The most likely reason for this grant is to ensure the:
Answer
The answer is C) provision of a public good. The coastal flood defence scheme at Broomhill Sands is non-excludable and non-rivalrous, meaning that once it is provided, it benefits all individuals without diminishing availability for others. This aligns with the characteristics of a public good, which justifies the use of the National Lottery grant to support the scheme, ensuring that the community has adequate protection from flooding.