Pearson Edexcel International GCSE Economics: Environment and redistribution (4EC1) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover section 2.1.1 e) and f) of the Pearson Edexcel International GCSE Economics (4EC1) specification, Issue 3: protection of the environment and redistribution of income. All countries, firms and figures are invented. Work through the study guide and revision notes first. See the course hub, the checklist and the free diagnostics.

Questions

1. State two ways a building firm can cause noise pollution. [2]

2. What is meant by relative poverty? [2]

3. In Country D (illustrative), annual income is taxed at 0% on the first 7,000, 12% on income from 7,000 to 28,000, and 32% on income above 28,000.

(a) Calculate the net pay of a worker with gross pay of 15,000. [3] (b) Calculate the average tax rate for a worker with gross pay of 66,000. [3] (c) Explain why this tax system is progressive. [2]

4. A town council puts a tax of 0.60 dollars on each disposable cup. The table shows weekly demand and supply before the tax. The external cost of each cup is 0.50 dollars.

Price (dollars)	Quantity demanded	Quantity supplied before tax
1.00	700	400
1.30	640	520
1.50	600	600
1.90	520	760
2.10	480	840

(a) Find the market price and quantity once the tax applies. [3] (b) Calculate the weekly tax revenue. [2] (c) Calculate the fall in weekly external cost. [3] (d) Explain one reason the tax may reduce pollution by less than the council hopes. [2]

5. Country E pays a subsidy of 40 dollars on every solar panel sold. It sells 2,500 panels. The price paid by buyers falls from 300 dollars to 270 dollars.

(a) Calculate the total cost of the subsidy. [2] (b) Calculate the percentage fall in the price paid by buyers. [2] (c) Calculate the amount a seller receives per panel after the subsidy. [2] (d) Explain one disadvantage of using a subsidy to protect the environment. [3]

6. A factory saves 18,000 dollars a year by dumping waste in a river. Each year there is a 25% chance it will be caught. The fine is 40,000 dollars.

(a) Calculate the expected fine per year. [2] (b) Calculate the smallest fine that would remove the factory’s gain. [2] (c) Explain why a fine may fail to stop water pollution. [3]

7. Firms P and R must each cut emissions by 80 tonnes. Cutting costs P 25 dollars a tonne and R 70 dollars a tonne. The government instead lets them trade permits at 40 dollars each.

(a) Calculate the total cost if neither firm trades. [2] (b) P cuts 160 tonnes and sells 80 permits to R. Calculate each firm’s net cost. [3] (c) Explain one drawback of pollution permits. [3]

8. Explain how a government-provided park may help protect the environment. [3]

9. Country A has eight households with monthly income per person (dollars): 60, 90, 120, 150, 190, 240, 330 and 625. Relative poverty is defined here as income below 50% of the median. The absolute poverty line is 100 dollars.

(a) Calculate the relative poverty line. [2] (b) State the number of households in absolute poverty. [2] (c) Every income rises by 15%. Calculate the number of households below each poverty line. [3] (d) Explain what your answers show about economic growth and poverty. [2]

10. Explain two reasons why a government may want to reduce income inequality. [4]

11. Analyse how government investment in education and healthcare may reduce poverty. [6]

12. Factories in a city produce air pollution. Evaluate whether taxation is the best way for the government to reduce it. [9]

Answers

1. Any two, for example: operating machinery or drills [1]; working at night or early morning, or running delivery vehicles on residential roads [1]. [2] Examiner insight: A “State” answer needs only a short phrase each. Writing a paragraph does not earn more than two points here.

2. Income far lower than what is normal (the average or median) in that country [1]. It is judged by comparing with others, not against a fixed standard [1]. [2] Examiner insight: Two separate parts to the definition help. “Being poor” alone does not mention comparison.

3. (a) Taxable income in the 12% band = 15,000 − 7,000 = 8,000 [1]. Tax = 0.12 × 8,000 = 960 [1]. Net pay = 15,000 − 960 = 14,040 dollars [1]. [3] (b) Tax in the 12% band = 0.12 × 21,000 = 2,520 [1]. Tax above 28,000 = 0.32 × 38,000 = 12,160, so total tax is 14,680 [1]. Average rate = 14,680 ÷ 66,000 × 100 = 22.2% [1]. [3] (c) The average rate climbs from 6.4% for 15,000 to 22.2% for 66,000 [1] because higher incomes are taxed at higher rates on the extra income [1]. [2] Examiner insight: Show each band separately. A single multiplication of the whole income by one rate makes the working hard to credit.

4. (a) The tax shifts supply up by 0.60, so sellers supply at price p what they supplied at p − 0.60 before [1]. At 1.90, supply equals the old supply at 1.30, which is 520 [1]. This equals demand at 1.90, so the price is 1.90 dollars and the quantity is 520 [1]. [3] (b) Revenue = 0.60 × 520 [1] = 312 dollars per week [1]. [2] (c) External cost before = 0.50 × 600 = 300 [1]. After = 0.50 × 520 = 260 [1]. Fall = 40 dollars per week [1]. [3] (d) Demand for cups may be inelastic because few cheap substitutes exist [1], so quantity falls by only 13.3% and most of the pollution continues [1]. [2] Examiner insight: In (a), say how the supply curve moves. A bare “1.90” is a weaker answer than one that links it to the tax.

5. (a) 40 × 2,500 [1] = 100,000 dollars [1]. [2] (b) (300 − 270) ÷ 300 × 100 [1] = 10% [1]. [2] (c) 270 + 40 [1] = 310 dollars [1]. [2] (d) The subsidy costs the government 100,000 dollars [1], which may have to come from taxes or from cutting other spending, such as schools [1], so there is an opportunity cost [1]. [3] Examiner insight: Be careful to use the buyer’s price in (b), not the seller’s. A good explanation develops “it costs money” into what is given up.

6. (a) 0.25 × 40,000 [1] = 10,000 dollars [1]. [2] (b) Fine × 0.25 must reach 18,000 [1], so the fine is 18,000 ÷ 0.25 = 72,000 dollars [1]. [2] (c) If inspections are rare, the chance of being caught is low [1], so the firm may treat the fine as an occasional business cost [1]. A fine also punishes after the damage and does not clean the river [1]. [3] Examiner insight: Context matters. Tie the answer to the factory’s gain and the chance of being caught, not to a general statement about crime.

7. (a) Cost = 80 × 25 + 80 × 70 [1] = 2,000 + 5,600 = 7,600 dollars [1]. [2] (b) P: cost of cutting 160 tonnes = 4,000, receives 80 × 40 = 3,200, so net cost 800 dollars [1]. R: pays 3,200 for permits and cuts nothing, so net cost 3,200 dollars [1]. Both are lower than 2,000 and 5,600 respectively [1]. [3] (c) If the government sets the limit on emissions too generously [1], total pollution stays high [1] and firms that can afford permits keep polluting [1]. [3] Examiner insight: Keep the firm’s cost of cutting (4,000) separate from the money received for permits (3,200). Mixing them makes the working hard to follow.

8. Trees and plants take in some air pollution [1]. Grass and soil absorb rainwater, reducing runoff and flooding [1]. A park gives people green space away from traffic, which reduces the effects of noise and stress [1]. [3] Examiner insight: Each statement needs the environmental effect, not just “people enjoy parks”.

9. (a) Median = (150 + 190) ÷ 2 = 170 [1]. Line = 0.5 × 170 = 85 dollars [1]. [2] (b) Incomes below 100 are 60 and 90 [1]: 2 households [1]. [2] (c) New incomes: 69, 103.5, 138, 172.5, 218.5, 276, 379.5, 718.75. Absolute poverty: only 69 is below 100, so 1 household [1]. New median = (172.5 + 218.5) ÷ 2 = 195.5, so the line is 97.75 [1]. Only 69 is below it, so relative poverty is 1 household, unchanged [1]. [3] (d) Growth reduced absolute poverty from 2 households to 1 [1] but did not change relative poverty, because every income rose by the same percentage [1]. [2] Examiner insight: Recalculate the median after the change. Keeping the old line leads to a wrong conclusion.

10. Reason 1: to meet basic needs [1], since people on very low incomes may lack food, shelter or medicine [1]. Reason 2: ethical, because large gaps in income seem unfair [1], and many people believe everyone should have a decent minimum standard of life [1]. [4] Examiner insight: Two developed points are stronger than four listed words.

11. Education raises skills [1], so workers can get better-paid jobs [1], which lifts household income [1]. Healthcare reduces illness [1], so people can work more days and for longer [1]. The effects take years, so poverty may not fall at once, and the spending has an opportunity cost [1]. [6] Examiner insight: An “Analyse” answer builds a chain. Show each link, from spending to skills to income to poverty.

12. Tax raises the cost of producing, which shifts supply left and raises price [1]. Output falls and so does pollution [1]. It makes polluters pay and raises revenue [1]. If demand is inelastic, output falls little [1]. Regulation (limits on emissions) gives a firmer result [1] but needs inspection and may be costly to enforce [1]. Taxes may raise prices for poorer households, and firms may move away [1]. Permits could also meet a cap at lower cost [1]. Judgement: tax is a good tool if demand is elastic and revenue is used well, but combined with regulation it is likely to work better because the limit on pollution is clear [1]. [9] Examiner insight: An “Evaluate” answer should reach a conclusion supported by the points made. A list of methods without a decision stays descriptive.

Where marks are usually lost

• Working out revenue or external cost from the pre-tax quantity.
• Using the wrong price in subsidy calculations.
• Giving a flat percentage of the whole income when asked about banded tax.
• Defining relative poverty without comparing with others.
• Forgetting to recalculate the median line after incomes change.
• Naming a policy without showing how it alters what firms or people do.
• Writing a list for “Evaluate” without a final judgement.
• Omitting units or the word “dollars” in money answers.

Next steps

• Review the study guide and revision notes.
• Return to the Edexcel IGCSE Economics hub and the checklist.
• Take the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

Pearson Edexcel International GCSE in Economics (4EC1), specification Issue 3, February 2026, Pearson Education Limited, section 2.1.1 e) and f).