IB Econ Mid Term Corrections

IB Econ Mid Term Corrections - Mid-term Exam Economics IB...

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Mid-term Exam – Economics IB HL Paper One - Corrections Gaith Kalai Question 2: Mark Scheme Answer (a) Explain the concepts of maximum and minimum price controls. [10 marks] Responses should explain what maximum prices are, i.e. price ceilings set by the government or some other agency. The price is not allowed to rise above this level, although it is allowed to fall below it. Better responses will give examples of when this may be appropriate, e.g. for rent controls or for basic goods to keep low for the lower wage earners. The best responses will also include a diagram. Responses should explain what minimum prices are, i.e. price floors set by the government or some other agency. The price is not allowed to fall below this level, although it is allowed to rise above it. Better responses will give examples of when this may be appropriate, e.g. for wages or to protect producers’ incomes. The best responses will also include a diagram. Candidates who only deal with one of the concepts should be limited to a maximum of [5 marks]. Price controls are governmental impositions on the prices charged for goods and services in a market, usually intended to maintain the affordability of staple foods and goods, and to prevent price gouging during shortages, or, alternately, to insure an income for providers of certain goods. There are two primary forms of price control, a price ceiling, the maximum price that can be charged, and a price floor, the minimum price that can be charged. Rent control is a price ceiling on rent. When soldiers were coming back from World War II and starting families (causing a large demand for apartments), but stopped receiving pay (there was no longer a war), many could not deal with the jumping rent. The government put in price controls, so the soldiers and their families were
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This document was uploaded on 10/26/2011 for the course PLIR 2050 at UVA.

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IB Econ Mid Term Corrections - Mid-term Exam Economics IB...

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