A-LevelEconomicsGovernment Microeconomic InterventionOct/Nov 2020Paper 1 Q91 Mark
A government reduces income tax but at the same time raises the rate of sales tax (VAT). What are the likely effects on the demand and supply of a normal good?
Ademand decreases, supply decreases
Bdemand decreases, supply increases
Cdemand increases, supply decreases
Ddemand increases, supply increases
✓ Correct Answer
The correct answer is C: demand increases, supply decreases
📋 Examiner Report & Trap Analysis
Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
🎯 Mark Scheme Breakdown
Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.
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