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IB Economics HL 2.11.4 Hl Monopoly Questions

Practise 2.11.4 (HL) Monopoly in IB Economics HL by reviewing the concepts and applying them to marked questions.

Syllabus
First assessment 2022
Course
Economics HL
Level
HL

Exam points

  • Monopoly profit maximization can create allocative inefficiency and welfare loss
  • Monopoly may restrict output and raise price compared with perfect competition
  • Natural monopoly is a special monopoly case linked to economies of scale
  • Diagram: market power where AR exceeds MC
  • Diagram: monopolist showing abnormal profit, normal profit, and losses

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Study 2.11.4 (HL)—Monopoly conceptsOpen the corresponding Concept lesson for explanations, examples and exam connections.

IB Economics HL 2.11.4 Hl Monopoly Questions question 1

[Maximum number: 2]

Economists agree that travel by train, instead of by plane or car, should be promoted in Europe because of environmental issues. However, the growth of passenger rail travel in Spain has slowed down. During 2013, millions of passenger-kilometres* travelled on railways in Spain increased by 6.72 %, while in 2019 the annual increase only amounted to 1.36 %.
* passenger-kilometres measure the distance travelled by all passengers over one year

Figure 4 illustrates the monopoly-market structure for tickets on a train between Madrid and Barcelona in Spain. MC is marginal cost, AC is average cost, D is the demand for tickets and M R is marginal revenue.

Figure 4

Figure 4

Outline one reason why a railway is a natural monopoly.

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