EJC_H2Econs_Topic4

1 © Eunoia Junior College Economics Department 2025 Topic 4: Government Intervention and the Labour Market Theme 2.1: Price Mechanism and its Applications How to use this set of lecture notes? 1) BEFORE LECTURES – UNDERSTANDING CONTENT - Reference your notes against your H2 syllabus. Mark out the key concepts so that you know what you MUST know - Read your notes ahead so that you can focus on listening and capturing additional notes during lectures 2) During lectures – APPLYING CONTENT - Bring your hard copy notes along, and use your PLDs to refer to the lecture slides concurrently - Capture additional notes, especially the real world examples where you can note down how concepts are applied and how economic analysis are developed in varying contexts - You should make use of a notetaking/consolidation tool to take notes during lessons and to consolidate your learning at timely junctures. Examples are MIRO, Notion, Good Notes, Notability, Microsoft OneNote, KAMI, and etc. The choice is yours! 3) After Lectures – TUTORIAL PREPARATION to use content flexibly to show application, analysis and evaluation skills - Revise concepts relevant for the case study and essay questions - Refer to the notes and use it flexibly to prepare your answers to meet question requirements. Pure memorisation will not work as it does not involve deep understanding. - Do share your notes with your friends to multiply learning!

2 © Eunoia Junior College Economics Department 2025 1. Introduction to Economic Welfare CONTENTS 1.1 Consumer surplus 1.2 Producer surplus 1.3 Society’s welfare 2. Introduction to Government Intervention in the Free Market 2.1 Taxes (Direct and indirect taxes) 2.2 Subsidies 2.3 Price controls 2.4 Quantity controls (Quotas) 3. Application of Demand and Supply Analysis to the Factor Market: The Labour Market 3.1 Wage determination in a free market 3.2 Wage determination in a free market using demand and supply model 3.3 Non-wage determinants of demand and supply of labour 3.4 Wage adjustment process 3.5 An economic analysis of minimum wage 3.6 Explaining wage differentials Summary of Government Interventions and Impacts Essential Questions: 1. Why do governments intervene in markets? 2. What impact does government intervention have on markets? What might influence the impact of government intervention?

3 © Eunoia Junior College Economics Department 2025 1. Introduction to Economic Welfare The central economic problem c oncerns the allocation of scarce resources among competing uses to satisfy unlimited human wants for goods. Hence, our decision-making on how to allocate these scarce resources to meet our unlimited wants is crucial. Thus far, we claim that the price mechanism is efficient in allocating those resources in the free market. Specifically, we will consider how the price mechani