Question 22N.3.HL.TZ0.a.v
| Date | November 2022 | Marks available | [Maximum mark: 2] | Reference code | 22N.3.HL.TZ0.a.v |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Calculate | Question number | a.v | Adapted from | N/A |
“Best Meals” is one of many small catering companies, each of which prepares a variety of different meals for airlines in Country X. Table 1 shows the costs of production in US dollars (US$) on a per hour basis for “Best Meals”.
Table 1
The catering companies buy tomatoes from the domestic market to prepare their meals. Figure 1 illustrates the domestic market for tomatoes, which is perfectly competitive. S is supply and D is demand.
Figure 1
In order to support the incomes of the tomato farmers, the government of Country X has set a price floor (Pmin) at US$2.80 per kilogram.
Calculate the indirect tax paid by airlines for the catering meals they bought in 2021 if the domestic indirect tax rate on food was 6.5% and their expenditure on meals was US$54 506.70.
[2]
Expenditures without the tax
Any valid working should be rewarded with [1].
Sales tax paid = 54 506.70 5 1180 = $3326.70
An answer of $3326.70 without working is sufficient for [1].
Any valid alternative calculation should be rewarded.
e.g. 54 506.7 (0.065/1.065) = $3326.70
For full marks to be awarded the response must provide valid working and include correct units.
Although a significant number of candidates were able to calculate the indirect tax correctly, the majority were not prepared for this question and simply calculated the level of expenditure by the rate of indirect tax.
