Practise IB Economics HL 2.7.1 by explaining why governments intervene to raise revenue, support firms, influence production or consumption, correct market failure and promote equity.
Explain why governments provide subsidies.
Answers may include:
- definitions of subsidy
- diagram showing the imposition of a subsidy leading to higher producers' revenues (including the subsidy), lower prices and higher level of production/consumption
- explanation that governments provide subsidies to stimulate the production and consumption of merit goods (eg education, healthcare) and to support certain producers/consumers for political reasons
- examples of specific markets where subsidies have been provided in practice.
Assessment Criteria
Level ..... Marks
0 The work does not meet a standard described by the descriptors below. ..... 0
1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. ..... 1-3
2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. ..... 4-6
3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There are few errors. ..... 7-8
4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There are no significant errors. ..... 9-10