Unit 3 Problem Set
A. MPC and MPS
2 Point- Definition of the MPC
2 Point- Definition of the MPS
1 Point- Example
B. MPC and MPS
2 Point- Definition of Multiplier Effect
2 Point- Definition of the Spending Multiplier
Unit 4 Problem Set
A. Financial Sector
1 Point- Definition of barter
1 Point- Definition of commodity money
1 Point- Definition of fiat money
1 Point- Definition of stocks
1 Point- Definition of bonds
B. Money Dem
Scarcity, Opportunity Cost and PPC practice activity
Introduction: Assume the US government has discovered it has a surplus in its budget of $100 billion.
One party wishes to invest this surplus in new resources for education, while the other wishe
I B E c o no m i c s
W e lk e r
Unit 1.4 - Methods for Correcting Market Failures
Over-provision of Demerit goods (negative externalities of production and consumption):
1. Corrective Taxes: A tax on the production of a demerit good increases the costs fa
Unit 1.4 Market Failure
Directions: For each of the market failures described below, use a marginal benefit, marginal
cost diagram to illustrate and explain the misallocation of resources that exists assuming no
1.1 T he Law of De mand practice activ ity
We lke r
The table below s how the quantities of energy drinks dem anded at a range of pric es . Study the
table and ans wer the ques tions that follow.
Unit 1.4 - Government Intervention - Per Unit Subsidies and Price Controls
HL and SL questions:
1. Define per unit subsidy and explain why a government may want to employ subsidies in the market for
Unit 1.4 - Government Intervention
HL and SL questions:
1. Define indirect tax and distinguish between two types of indirect taxes a government may place on a
good or service.
2. Explain the effect that a specific, pe
Unit 1.2 - Elasticity
PED = price elasticity of demand.
PES = price elasticity of supply
XED = cross-price elasticity of demand
YED = income elasticity of demand
Calculate: Means to solve for
Unit 1.2 Elasticities - PED
Quiz - 16 marks
HL and SL Questions (these should take 8 minutes each):
1. Using appropriate diagram(s), explain why the price elasticity of demand for people
with high incomes will differ from those with lo
Circular Flow Model practice activity
Directions: Answer the questions below
1. Fill in the blank lines on the circular flow model below.
2. In the resource market:
a. What is the role of firms?
b. What is the households?