Explain, with the help of a diagram, the disadvantages to consumers of introducing a maximum price in a market for an essential food item.

Mark scheme

Marking points from the official mark scheme (May/June 2019). The mark or mark type is shown in brackets.

1. [1] (a) Knowledge and Understanding: 1 mark for correct diagram (Vertical axis correctly labelled: P/Price; Horizontal axis correctly labelled: Q/Quantity; Equilibrium price shown.).
2. [1] (a) Knowledge and Understanding: 1 mark for maximum price shown below the equilibrium price.
3. [2] (a) Application: Application to a situation of excess demand.
4. [2] (a) Application: Explanation of one possible disadvantage to consumers, such as: queuing, black market, rationing or seller preferences.
5. [2] (a) Application: Explanation of a second possible disadvantage to consumers, such as: queuing, black market, rationing or seller preferences.
6. [4] (b) Analysis: Up to 4 marks for analysis of advantages of privatisation (e.g., Efficiency improved because of aim of profit maximisation; Greater competition gives an incentive to be more productive; May increase the number of shareholders, encouraging enterprise culture; Greater efficiency could lead to lower prices for customers).
7. [4] (b) Analysis: Up to 4 marks for analysis of disadvantages of privatisation (e.g., Strive for efficiency could lead to higher unemployment; There may not be greater competition; could be a natural monopoly; Aim of satisfying shareholders may mean that prices are not reduced).
8. [3] (b) Evaluation: For exercising some judgement on whether the privatising of an industry will always have a positive effect. This could include a consideration of a positive effect for whom – firms, government, workers and consumers.
9. [1] (b) Evaluation: For a conclusion.