A-Level Economics: Who Really Pays a Tax on Sugary Drinks?

Students read a tax diagram, work out how the burden is shared between shoppers and firms, link it to price elasticity, then draw a subsidy themselves.

What students do

• Decide whether statements about taxes and subsidies are true or false
• Read a supply and demand diagram to find the price producers keep and how the tax is shared
• Calculate the consumers’ and producers’ shares, the tax revenue and the change in producer revenue, then link the incidence to price elasticity of demand
• Draw a subsidy on a diagram, calculate its cost and judge a newspaper claim

What the teacher gets

• A lesson plan for about 55 minutes of tasks, with a shorter 45-minute version. Allow longer in the timetable for handing out and feedback
• Worked answers for every calculation, including the subsidy
• Indicative guidance for the written judgement. It is not an exam board mark scheme and carries no marks or grades
• Editable Word versions of both files, so you can change the market or the figures

Specification

Edexcel A level Economics A (9EC0), Theme 1, section 1.2.9 Indirect taxes and subsidies: the impact of indirect taxes on consumers, producers and government, the incidence of a tax, the impact of subsidies and the areas that represent them. Checked against the Pearson specification, Issue 2, October 2016. The market and every figure are fictional and the questions are original. This is not a Pearson resource, and the lesson has not yet been tested in a classroom.