Mixed economic system — common mistakes

For any price control question draw the equilibrium first, then the control line, then label the gap. State who gains, who loses, and one side effect (black market, government stockpile, unemployment). That sequence covers the analysis and evaluation marks.

An 8-mark 'discuss whether the government should…' question wants two sides and a judgement. End with a condition: 'It depends on whether the industry is a natural monopoly / whether the tax is on an inelastic good / whether the subsidy reaches the intended group.'

Only if it is set below the equilibrium price. A ceiling set above equilibrium has no effect because the market price is already lower than the limit.

Both consumers and producers. The seller pays the government, but passes part of it on through a higher price. The more inelastic demand is, the larger the share consumers pay.

Because the industry may provide a merit good or positive externalities — rural bus services, for example — whose social benefit exceeds its private revenue. The subsidy keeps the service running, at the opportunity cost of the tax revenue used.