CAIE A-Level Economics 3.2.1 Indirect Tax Impact and Incidence

CAIE A-Level Economics 3.2.1 Indirect Tax Impact and Incidence
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise shifting supply by a specific indirect tax, separating consumer and producer incidence and using PED and PES to calculate price, quantity, revenue and burden.

How this is tested

  • draw a parallel supply shift equal to the specific tax per unit and mark both prices
  • identify consumer and producer incidence from the price wedge and quantities after tax
  • use relative PED and PES to explain burden shares and calculate tax revenue from taxed sales

Question 2(a)

[Maximum number: 8]

Explain what is meant by the incidence of an indirect tax and consider the extent to which it is possible for the incidence to pass from a producer of a good to a consumer of that good. [8]