IB Economics SL 2.7.1 Reasons for government intervention
IB Economics SL 2.7.1 Reasons for government intervention
Students practise explaining specific justifications for intervention—like correcting externalities, raising revenue, or promoting equity—using policy examples from exam texts.
How this is tested
- explain how subsidies reduce merit good underproduction by aligning MPB more closely with MSB
- explain how indirect taxes internalise negative externalities by shifting supply left
- explain how price ceilings improve affordability for low-income households but create shortages