Revision for other types of government intervention: Geoff Riley FRSA has been teaching Economics for over thirty years. The new supply schedule is shown in the right hand column of the table – less is now supplied at each and every market price, Find the new equilibrium price after the tax has been imposed, Calculate the total tax revenue going to the government. Change ).

VAT cut - will firms lower prices for consumers? Mr baum 1.3 Government Intervention In this topic we learn about how governments intervene in economies by affecting the price mechanism. This government intervention is a significant concept that appears throughout the course and students are expected to critically evaluate the balance between the market forces of the private sector and intervention by governments. Rising obesity as a barrier to development. As a result of this scarcity, choices have to be made. In addition, for the external assessment, there are two examinations for standard level students and three examinations at higher level. Find IB Resources For Scoring Better In Your IB Diploma. Factors that can cause a change in aggregate demand, Adam Smith, Karl Marx and Friedrich Hayek on Economic Systems, Gross National Happiness – Bhutan in Focus, Edexcel A-Level Economics Study Companion for Theme 1, AQA A-Level Economics Study Companion - Macroeconomics, Advertise your teaching jobs with tutor2u, VAT is a tax placed on the expenditure / a tax set as a percentage of the price of a good), A tax increases the costs of production causing an, The vertical distance between the pre-tax and the post-tax supply curve shows the tax per unit, With an indirect tax, the supplier may be able to pass on some or all of this tax onto the consumer through a higher price, Reduced rate of 5% is applied to domestic fuel and power, women’s sanitary products, children’s car seats, contraceptives, Zero-rated VAT on Food, Construction of new dwellings, rail and bus fares, books, newspapers and magazines, Children’s clothing, prescription drugs, Exempt from VAT - rent on domestic dwellings, Private education, Health service, Postal services, Burial and cremation, Small traders below the turnover limit for VAT registration. omg thnks!!! Supply extends and demand contracts until a new equilibrium at quantity Q1 and price P2 is reached. Read more about cookies, Information technology in a global society, at the level of producers and consumers in individual markets (microeconomics), at the level of the government and the national economy (macroeconomics). Coronavirus update: Are vaccines public goods? Learn more about economics in a DP workshop for teachers. What a small world! Change ), You are commenting using your Google account.

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Given the rapidly changing world, economic activity and its outcomes are constantly in flux. Specific tax – a fixed monetary value added on every unit of produce. For the internal assessment, both standard level and higher level candidates are required to produce a portfolio of three commentaries based on published extracts from the news media using the key concepts as a lens. Learn more about standard level (SL) economics. By continuing to use this website, you consent to our use of these cookies. Economics is an exciting, dynamic subject that allows students to develop an understanding of the complexities and interdependence of economic activities in a rapidly changing world. You can only talk about the RELATIVE PED and PES. Definition and diagram of price floor, effects on surpluses $5 tax placed on every packet of cigarettes in an attempt to decrease consumption.
[Year 12 Enrichment Task], Plastic sachets and negative externalities. Therefore, students are encouraged, throughout the course, to research current real-world issues.

The market equilibrium is at quantity Q2 and price P1 where demand D intersects supply S. Once an indirect tax of size P2-P3 (also represented by the orange line) is introduced the supply curve shifts from S to S+tax. These notes have been compiled by myself from my textbooks, online resources, and from kind friends that have been so helpful as to send me their notes to upload :). So what would the producers do if they are taxed? It all depends on PED and PES (price elasticity of demand and price elasticity of supply). Economics in the news. Total tax revenue: per unit tax * quantity; sum of areas marked in blue and green; areas: 2+3+5+6, Deadweight welfare loss: area marked in red, sum of areas numbered 4 and 7. The government imposes a tax of £3 per unit. 1.3 syllabus.

Bear with me as I'm still in the midst of uploading and updating. Price controls in Venezuela. - Japan Lifts Sales Taxes, Scottish minimum alcohol price reduces demand, Universal health coverage - a progress report, Spare ribs? Government: Since the government begins to subsidize the good and becomes a supplier, government expenditure increases. I created this website whilst in my final year of my IB Diploma at SJI International (Singapore). I’m a student in SJIIM (Malaysia, yup a sister school that started last year)… currently doing IBDP Econs HL as well… So Thank You even though I probably won’t see you in person anytime soon (well maybe hopefully… :D, thinking of Cali as well). A specific tax will shift the supply curve vertically up by the size of the tax. An example of this is the high level of duty on cigarettes and petrol. Higher level economics students must understand the tax incidence: consumers pay the area marked blue while the producers pay the area marked green. The Government would rather place indirect taxes on commodities where How serious is the UK about tackling climate change? Government Intervention This section of the IB Economics course examines the three main types of government intervention in the market: indirect taxes, subsidies and price controls. IB Economics pays close attention to the effects governments when they act and make decisions – both good and bad effects. You can only talk about the RELATIVE PED and PES, Guide to sketching the perfect Economics Diagram, Diagrams for IB Economics Internal Assessment, Guide to finding an article for Economics IA.

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