Maximum Prices (Online Lesson)

In this online lesson, students will cover the topic of maximum prices and how they can be used for tackling market failure.

WHAT YOU'LL STUDY IN THIS ONLINE LESSON

• The types of market failure that could be tackled using maximum prices
• The operation of maximum prices, using D&S market diagrams
• Examples of maximum prices in the real world, including rent controls, and rice subsidies in developing economies
• Key evaluation points for maximum prices

The lesson also includes a short "data response" style activity, and a suggested essay question.

Additional teacher guidance is provided at the end of the lesson.

HOW TO USE THIS ONLINE LESSON

Follow along in order of the activities shown below. Some are interactive game-based activities, designed to test your understanding and application of maximum prices. Others are based on short videos, including activities for you to think about and try at home.

If you would like to download a simple PDF worksheet to accompany the video activities, you can download it here: Maximum Prices. You can print it off and annotate it for your own notes, or make your own notes on a separate piece of paper to add to your school/college file.

ACTIVITY 1: GAME - MARKET FAILURE REVIEW

Try this interactive game, testing your knowledge of the different types of market failure.

ACTIVITY 2: VIDEO - MARKET FAILURE AND MAXIMUM PRICES

In this video, you will cover the basics of maximum prices and consider the different types of market failure for which they could be used as an appropriate policy measure.

ACTIVITY 3: VIDEO - DIAGRAMS FOR MAXIMUM PRICES

In this activity, we will practise adapting demand and supply diagrams following the introduction of a maximum price. We'll also extend our practice by considering different types of real-world markets and applications.

ACTIVITY 4: GAME - APPLIED MAXIMUM PRICES

Can you work out the value/level of some real-world maximum prices in this game?

ACTIVITY 5: READING AND RESEARCH TASK - ENERGY PRICE CAPS

Carry out your own reading and research to find out more about the UK's energy price cap for households. You should aim to produce an information poster to help households better understand the issues surrounding the price cap.

Here are some articles and resources to help you get started:

• Information from Ofgem, the industry regulator
• An analysis and evaluation video from Geoff Riley

ACTIVITY 6: VIDEO - APPLIED MAXIMUM PRICES

In this video, we explore some of the consequences of introducing "rent controls" in the housing market, and then provide you with an opportunity to have a go at a "data response" style activity on the Sri Lankan market for rice. Ask your teacher to let you know how many marks are available for each of the 4 questions provided.

ACTIVITY 7: VIDEO - EVALUATING MAXIMUM PRICES

In this video, we review some of the general evaluation points on maximum prices, and consider how to prioritise them for different markets. We then compare and contrast the impact of subsidies and maximum prices. At the end of your worksheet, there is a chance to apply your comparison of subsidies and maximum price in an essay question.

ENRICHMENT TASK: RENT CONTROLS IN LONDON

Carry out some wider reading and research into the Mayor of London's proposal to introduce rent controls in the city. You can start your research using this BBC "Reality Check" article from 2019. Present arguments either for or against the proposal from each of the following stakeholder perspectives:

• Low-income London households
• London landlords
• High-income London households
• Local government

ADDITIONAL TEACHER GUIDANCE

This lesson comprises:

• Around 25 minutes of guided video activity, spread over 4 videos and supported by an accompanying worksheet
• Around 20 minutes of "thinking time" and student activity spread over the videos
• 2 interactive games, reviewing market failure key terms and applying maximum prices to the real world
• 2 reading and research tasks, on energy price caps and rent controls in London
• An exam-style data response task at the end of Video 3
• An essay question task, supported by the content in Video 4

You can download some suggested answers to the data response and essay here, although please be advised that you will need to tell your students how many marks each question is allocated - this is because different awarding bodies award marks differently.

We suggest allowing 60 to 70 minutes for the main tasks in this lesson, plus an additional 20 minutes for the data response questions, and 30 minutes for the essay.