IB Economics HL 2.11 Market Failure: Market Power Question Bank

Evaluate how market power affects efficiency, welfare, prices, output and consumers, and assess competition policy and regulation.

Covered syllabus points

2.11.1 (HL)—Market structures 2.11.2 (HL)—Rational producer behaviour 2.11.3 (HL)—Degrees of market power 2.11.4 (HL)—Monopoly 2.11.5 (HL)—Oligopoly 2.11.6 (HL)—Monopolistic competition 2.11.7 (HL)—Advantages and risks of market power 2.11.8 (HL)—Government responses to market power

[Maximum number: 3]

(a)

State two characteristics of a perfectly competitive market.

[ 2 ]

(b)

Draw and label the marginal revenue (M R) curve for corn for an individual farmer in Nissos on the grid below.

Figure for Question (b) — IB Economics HL

[ 1 ]

Draw and label the marginal revenue ( M R ) curve for corn for an individual farmer in Nissos on the grid below.

Horizontal line at $\$ 8.00$ with MR label on Figure 1 is sufficient for [1].

Figure for Answer to Question (b) — IB Economics HL

[Maximum number: 5]

Note that widgets and pidgets are imaginary products.

In the country of Burbia, the demand and supply of widgets are given by the functions

\begin{aligned} & Q d=249-4 P \\ & Q s=150+14 P \end{aligned}

where Qd is the quantity demanded per month, Qs is the quantity supplied per month and P is the price per widget in dollars ($).

(a)

Draw and label the marginal revenue (MR) curve for the 2018 Football World Cup final.

[ 1 ]

(b)

(I) Using the diagram on page 6 and your answers to parts (j) and (k), explain how the organizers could achieve their goal of profit maximisation.

[ 4 ]

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Covered syllabus points

2.11 Market failure - market power question 1

Question (a)

Question (b)

2.11 Market failure - market power question 2

Question (a)

Question (b)