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IB Economics SL 2.3.5 Allocative Efficiency Questions

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.

Syllabus
First assessment 2022
Course
Economics SL
Level
SL

Exam points

  • Define allocative efficiency as the best allocation of resources in which social or community surplus is maximized.
  • Explain how competitive equilibrium maximizes consumer and producer surplus, with marginal benefit equal to marginal cost.
  • Evaluate why market failure can prevent competitive markets from achieving allocative efficiency.

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