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IB Economics HL 2.8.2 Externalities and Welfare Loss Questions

Practise IB Economics HL 2.8.2 by analysing positive and negative externalities, merit and demerit goods, under-allocation, over-allocation and welfare loss with marked exam evidence.

Syllabus
First assessment 2022
Course
Economics HL
Level
HL

Exam points

  • Positive externalities of production or consumption create under-allocation without intervention.
  • Negative externalities of production or consumption create over-allocation without intervention.
  • Merit goods and demerit goods are linked to positive and negative externality cases.
  • Diagram: market failure from negative production, negative consumption, positive production, and positive consumption externalities.

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