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2.3
(a)
2.5
(a)
2.8
(a)
Page 1 of 35
(a)
2.11 (a)
2.14 (a)
Chapter 3 Elasticities
3.3
(a)
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(a)
(b)
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(a)
(b)
(a)
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Definitions of indirect tax, price elasticity of demand, price elastic and price
inelastic demand.
Theory of indirect taxes in relation to price elasticity of demand and tax
revenues including explanation of likely range of values of PED for yachts
and cigarettes.
Diagrams showing tax revenues following the imposition of an indirect tax.
Examples of other goods with price elastic and price inelastic demand.
Synthesis of evaluation (examine).
Examination may include: consideration of how the imposition of an indirect
tax on yachts may be an appropriate policy to redistribute income as yachts are
a luxury good, but such a tax is likely to lead to lower tax revenue than a tax
on cigarettes.
4.2
(a)
4.4
(a)
Page 5 of 35
4.5
(a)
Definitions of indirect taxes, subsidies and price controls (price ceilings and
price floors).
Theory of market demand and supply, and the achievement of market
equilibrium at the point of intersection of the demand curve and the supply
curve.
Diagrams showing the imposition of an indirect tax and a subsidy, which lead
to a new market equilibrium at the point where the demand curve intersects
the new supply curve; showing the imposition of a price ceiling and a price
floor, which do not allow the market to clear, i.e. to achieve a new
equilibrium, thus resulting in a shortage (price ceiling) or surplus (price floor).
Examples of real-world cases involving indirect taxes, subsidies, price
ceilings, price floors.
4.8
(a)
(b)
Page 6 of 35
Diagram showing the welfare loss arising from the imposition of the tax.
Discussion may include: at the new after-tax equilibrium, MB > MC,
indicating there is an underallocation of resources to the production of the
good.
(b)
Page 7 of 35
Differences:
o A subsidy leads to an equilibrium P and Q, and therefore no excess
supply or demand, whereas a price floor leads to disequilibrium with a
surplus of the good (excess supply) that must be purchased by the
government in order to maintain the floor.
o With a subsidy consumers pay a lower price, whereas with a price floor
they pay a higher price.
o With a subsidy consumers buy a larger quantity, whereas with a price floor
they buy a smaller quantity.
o Therefore with a subsidy consumers are better off (lower P and higher Q),
whereas with a price floor they are worse off (higher P and lower Q).
o (higher level) With a subsidy consumer surplus increases, whereas with a
price floor it falls.
o The government budget is worse off in both cases, but with price floors
there are extra costs due to the need to store and dispose of the surplus
bought by the government.
Synthesis or evaluation (compare and contrast).
Arguments may include: consideration of points of similarity and difference.
Opinions or conclusions should be presented clearly and should be supported by
appropriate examples.
4.14 (a)
(b)
Page 8 of 35
4.15 (a)
5.4
(a)
Page 9 of 35
(a)
5.9
(a)
(b)
Page 10 of 35
(b)
Page 11 of 35
5.17 (a)
(b)
Page 12 of 35
(b)
HL topics
Part (a) and part (b) questions
5.22 (a)
Page 13 of 35
Chapter 6 The theory of the firm I: Production, costs, revenue and profit
(Higher level topic)
HL topics
Part (a) questions
6.2
(a)
6.3
(a)
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6.4
(a)
6.8
(a)
HL topics
Part (a) and part (b) questions
7.1
(a)
Page 15 of 35
(a)
Page 16 of 35
(a)
(b)
Definition of monopoly.
Theory of the firm with reference to monopoly and the particular assumptions
that underlie this model, as well as the importance of barriers to entry.
Diagrams for a firm in monopoly, illustrating the profit-maximising position
of the firm, results with respect to allocative and productive efficiency,
welfare analysis (consumer and producer surplus, social surplus and welfare
loss), and the possibility of achieving economies of scale large enough that
price is lower and quantity greater in comparison with perfect competition.
Examples of monopolies.
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(a)
(b)
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(b)
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(b)
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(b)
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8.2
(a)
8.4
(a)
8.8
(a)
Page 22 of 35
9.2
(a)
9.5
(a)
Page 23 of 35
(a)
9.10 (a)
9.12 (a)
(b)
Page 24 of 35
(b)
Page 25 of 35
10.2 (a)
10.4 (a)
(b)
Definition of unemployment.
Theory of unemployment, with reference to how it is measured, difficulties in
measurement including the presence of hidden unemployment,
underemployment and the nature of the unemployment rate as an average over
an entire population group that ignores regional and other disparities.
Diagrams illustrating one or more types of unemployment.
Examples of types of unemployment and difficulties in measurement.
Definition of unemployment.
Theory of unemployment with reference to costs and consequences, including
the different types of unemployment and their economic, personal and social
costs.
Diagrams illustrating one or more types of unemployment.
Examples of types and consequences of unemployment.
Synthesis or evaluation (discuss).
Discussion may include: consideration of the length of unemployment
depending on what type it is, which are the more serious types of
unemployment imposing greater costs (loss of output, income and tax
revenues, costs to government of unemployment benefits, social problems,
etc.), the problem of hysteresis often associated with long-term
unemployment, consideration of policies to reduce unemployment and the
relative costs associated with different policies, impacts on various
stakeholders, short- and long-term consequences.
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(b)
10.9 (a)
Page 27 of 35
11.2 (a)
11.4 (a)
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11.7 (a)
model, with reference to the factors that can cause increases in actual output
(reduction in unemployment and increase in productive efficiency, causing
movement of a point closer to the PPC) and the factors causing increases in
production possibilities (improvements in technology and resources quality,
increases in resource quantity, causing an outward shift of the PPC).
Diagram of the PPC showing increases in actual output and increases in
production possibilities.
Examples of factors causing increases in actual output and in production
possibilities.
(b)
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(b)
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12.3 (a)
12.5 (a)
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12.7 (a)
(b)
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(b)
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(b)
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(b)
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