Government Intervention in Markets
H2 Economics - syllabus 9570, 2026
Original teaching notes
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Explain taxes, subsidies, price controls and quotas. Track what buyers pay, what sellers receive and whether the policy achieves its aim.
- What does the policy change?
Start with the rule the government changes.
- How does a tax change the market?
Separate the buyer price from the seller price.
- How does a subsidy change the market?
Buyers pay less; sellers can receive more.
- When does a price ceiling cause a shortage?
Check whether the maximum is below equilibrium.
- Why does a price floor not guarantee more revenue?
A higher price is not a guarantee of sales.
- What does a quota fix?
A quantity limit leaves price to adjust.
- Which price belongs in the calculation?
Follow the payment before multiplying.
- Why can the same policy have different effects?
Responsiveness changes the size of the outcome.
- Who actually gets the good?
The legal rule does not decide access by itself.
- How do you judge whether a policy worked?
Use the objective, the evidence and the alternative.
- How do taxes and subsidies change surplus?
Use the price each side actually receives or pays.
- Why does rationing change the surplus answer?
A restricted quantity does not identify who trades.