The Effects of Price Controls
This section of the IB syllabus requires you to understand the following:
- Maximum price: causes and consequences
- Minimum price: causes and consequences
- Price support/buffer stock schemes
Before learning about these concepts, it is first worth being sure of the following concepts:
- Consumer Surplus
- Producer Surplus
The rest of this post gives you links to online resources to help you become an expert in these concepts. Make sure you consult your text book(s) too, to provide further understanding.
Consumer and Producer Surplus
http://welkerswikinomics.wetpaint.com/page/Consumer+and+Producer+Surplus
Maximum prices and Minimum prices : causes and consequences
http://tutor2u.net/economics/revision-notes/as-marketfailure-maximum-prices.html (although you may not understand all of this yet – the bits on elasticity for example)
http://tutor2u.net/economics/content/topics/marketsinaction/black_markets.htm
http://www.fmhs.auckland.ac.nz/faculty/ltu/toni_ashton/supply-demand.swf [sections 7 and 8]
http://welkerswikinomics.wetpaint.com/page/Application%3A+Government-Set+Prices
Price support/buffer stock schemes
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