Practise IB Economics SL 2.3.5 by explaining how competitive equilibrium maximises social surplus and when market failure prevents allocative efficiency, using marked exam evidence.
Explain the view that the best allocation of resources occurs when consumer surplus and producer surplus are maximized.
Answers may include:
- definitions of allocation of resources, consumer surplus, producer surplus
- diagram to show consumer and producer surplus being maximized
- explanation that resources are being used in the most efficient way when demand equals supply and the consumer surplus and producer surplus are maximized
- examples of goods and services that ensure resources are allocated efficiently. Any market example is acceptable.
Assessment Criteria
Level 0 (0 marks): The work does not meet a standard described by the descriptors below.
Level 1 (1-3 marks): There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors.
Level 2 (4-6 marks): There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors.
Level 3 (7-8 marks): There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There are few errors.
Level 4 (9-10 marks): There is understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There are no significant errors.