Question 22M.3.HL.TZ0.2a.iv
| Date | May 2022 | Marks available | [Maximum mark: 2] | Reference code | 22M.3.HL.TZ0.2a.iv |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Calculate | Question number | a.iv | Adapted from | N/A |
Taxes on fuel
India is said to have the highest taxes on fuel in the world. At the current market equilibrium, the price of petrol (gasoline) in New Delhi is comprised of the components shown in Table 4 (approximate figures).
Table 4
Figure 2 illustrates the market for petrol in New Delhi. D represents the demand for petrol in millions of litres per day. S + t represents the supply (incorporating the effect of indirect tax) of petrol in millions of litres per day.
Figure 2
Using Figure 2 and your answer to part (a)(ii), calculate the loss in consumer surplus which results from the imposition of indirect taxes on petrol in New Delhi.
[2]
40 × 0.5 (500 + 600) (million)
Any valid working should be rewarded with [1]
= RPs 22 billion (or 22 000 million or 22 000 000 000)
An answer of RPs 22 billion (or 22 000 million or 22 000 000 000) without workings is sufficient for [1]
OFR applies provided the S curve is drawn below the S + t curve.
N.B. If a student finds the y intercept (of the demand curve, which is 270) and calculates the difference between two triangles, the working should be as follows:
0.5 (240 × 600) − 0.5 (200 × 500) = 72 000 − 50 000
For full marks to be awarded the response must provide valid working and include correct units.
Candidates achieving full marks generally knew that the change in consumer surplus could be determined by calculating the area of the trapezium (bounded by the respective price and quantity). A significant number of candidates attempted to calculate the initial and final values and may have been confused by the difficulty of doing so. The question was not answered well even though the calculation should have been fairly straightforward.
