Syllabus: SQA - Higher Course Spec Economics
Module: Economics of the Market
Lesson: Market Intervention

Introduction

The “Market Intervention” element of the SQA Higher Economics course sits within the “Economics of the Market” area of study. It helps students understand why and how governments step into otherwise free markets. It builds on foundational knowledge of supply and demand, profit, and competition, equipping learners to evaluate when intervention is necessary and what forms it might take.

This topic goes beyond textbook theory—it’s about making sense of the real-world challenges governments face when market outcomes are unfair, inefficient, or harmful. Teachers will find this topic rich for discussion, debate, and practical application.

Key Concepts

The SQA Higher course expects learners to explore the following within market intervention:

• Market failure: Situations where free markets do not allocate resources efficiently, such as externalities or missing markets.

• Government intervention tools:

  • Taxes (to reduce consumption or raise revenue)

  • Subsidies (to encourage consumption or production)

  • Price controls (minimum or maximum prices)

  • Regulation and legislation

• Rationale for intervention:

  • To address negative externalities (like pollution)

  • To promote positive externalities (like education or vaccinations)

  • To ensure fairness (equity in access or income distribution)

• Costs and benefits of intervention, including:

  • Potential government failure

  • Efficiency vs equity trade-offs

  • Unintended consequences of policies

Students should be able to describe these interventions, explain their purposes, and evaluate their effectiveness using real data or case examples.

Real-World Relevance

Market intervention plays out in daily news headlines and public policy:

• Energy price caps in the UK: Ofgem introduced price caps to protect consumers from soaring fuel bills. While this helps affordability, it can also reduce incentives for suppliers to innovate or invest.

• Sugar tax on soft drinks: Aimed at reducing obesity, this tax has shifted consumer behaviour but raised questions about whether it disproportionately affects low-income families.

• Covid-19 vaccine funding: Governments subsidised vaccine development and distribution, demonstrating positive intervention with global impact.

Use these examples to help students connect theory with practice and to debate the complexities of government involvement.

How It’s Assessed

In the SQA Higher Economics assessment, learners are expected to:

• Explain key terms like externalities, subsidies, and price controls

• Analyse the causes and effects of market failure

• Evaluate different government responses, using real or hypothetical data

Assessment styles include:

• Extended response questions

• Case study analysis

• Data interpretation using graphs or charts

Command words to look out for:

• Describe: recall or define concepts

• Explain: provide cause-and-effect relationships

• Analyse: break down into parts and interpret

• Evaluate: weigh strengths and weaknesses to reach a judgement

Students benefit from structured practice using past paper questions that mix these styles.

Enterprise Skills Integration

This topic builds key enterprise skills:

• Decision-making: weighing up the pros and cons of different interventions

• Critical thinking: assessing whether interventions lead to intended outcomes

• Problem-solving: proposing policy responses to current economic issues

• Communication: justifying arguments clearly and persuasively, both in writing and discussion

Practical classroom tasks might include simulating a government debate or designing a policy response to a market failure scenario.

Careers Links

This topic links directly to:

• Economics and public policy roles: Local and national government, think tanks, civil service

• Business and consultancy: Understanding how regulation and tax affect market decisions

• Social enterprise and NGOs: Developing interventions for social and economic change

It supports Gatsby Benchmarks 4 (linking curriculum to careers) and 5 (encounters with employers), especially if tied to guest speakers, local case studies, or work-related projects.

Example: Invite a local policy analyst or business leader to discuss how legislation has shaped their sector, from environmental rules to food labelling laws.

Teaching Notes

Tips for delivery:

• Use contemporary news stories to frame lessons—students engage more when they see economics in action.

• Encourage debate: “Should governments control rents?” or “Is minimum wage always a good idea?” get students thinking critically.

• Use dual-axis graphs and case-based questions to build data literacy.

Common pitfalls:

• Overfocusing on textbook definitions without practical application

• Confusing causes of market failure with the outcomes of intervention

• Assuming all government actions are automatically beneficial

Extension ideas:

• Investigate examples of government failure—like the Common Agricultural Policy or fuel subsidies

• Compare market interventions across countries or over time

Suggested tools:

• Interactive simulations (budgeting for policy decisions)

• Local council case studies

• Past paper scaffolding tools to build up essay responses