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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 determine the weekly revenue received by Camelot after tax, we first need to calculate the total sales revenue from lottery tickets.
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Calculate total revenue from ticket sales:
Total revenue = Price per ticket × Number of tickets sold
Here, Price per ticket = £2 and Number of tickets sold = 73 million.
Total revenue = £2 × 73,000,000 = £146 million
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Calculate tax revenue:
Tax revenue = Tax per ticket × Number of tickets sold
Tax per ticket = £0.24
Tax revenue = £0.24 × 73,000,000 = £17.52 million
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Calculate net revenue after tax:
Net revenue = Total revenue - Tax revenue
Net revenue = £146 million - £17.52 million = £128.48 million
Thus, the weekly revenue received by Camelot after paying the tax to the government is £128.48 million.
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 several impacts on the demand for gaming machines:
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Increased Demand for Gaming Machines: Since gaming machines are substitutes for lottery tickets, the increase in price of lottery tickets might lead some consumers to turn to gaming machines instead.
This is supported by the cross elasticity of demand estimate of 1.28, which indicates a positive relationship between the prices of the two goods.
If the price of one good rises (in this case, the lottery ticket), the demand for its substitute (gaming machines) is likely to increase.
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Elasticity Interpretation: A cross elasticity of demand of 1.28 suggests that the demand for gaming machines is fairly responsive to changes in the price of lottery tickets, meaning that as lottery tickets become more expensive, more consumers will likely opt for gaming machines as a preferred choice for gambling activities.
In summary, the price increase of national lottery tickets is likely to lead to an increase in the demand for gaming machines due to their substitutive relationship.
Step 3
The most likely reason for this grant is to ensure the provision of a public good.
Answer
The grant from the National Lottery fund aimed at the coastal flood defence scheme at Broomhill Sands ensures the provision of a public good. Public goods are characterized by being non-excludable and non-rivalrous, meaning that they are available for all and their use by one individual does not diminish availability to others.
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Non-exclusivity: The flood defence benefits all residents and businesses in the area, thereby justifying the funding from a public entity.
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Public Good Characteristics: By investing in flood defences, the scheme aims to protect homes and businesses, which is a clear indication of providing a service that benefits the entire community, rather than an exclusive or private benefit.
Therefore, the correct answer is C) provision of a public good.