Many governments tax petrol. As drivers switch to electric vehicles, this revenue will be lost. However, tax revenue may come from other sources if a country’s production possibility curve (PPC) shifts to the right. Tax revenue may be used for a variety of purposes including subsidising public transport, for example bus transport.

3(a)Taxation Public ExpenditureEasy2 marks

Define ‘tax’.

3(b)Production Possibility Curves Growth Trade OffsHard4 marks

Explain two causes of a shift to the right of a country’s PPC.

Answer

0 words

3(c)Specialisation Division LabourHard6 marks

Analyse the advantages a car firm may gain from specialising in the production of luxury electric cars.

Answer

0 words

3(d)Indirect Taxes SubsidiesHard8 marks

Discuss whether or not a government should subsidise bus transport.

Answer

0 words