IB Economics SL 2.8.4 Responses to externalities & common pool resource problems
IB Economics SL 2.8.4 Responses to externalities & common pool resource problems
Students practise explaining and recommending policy responses—carbon taxes, subsidies, tradable permits—to correct externalities and common pool resource problems.
How this is tested
- explain how a carbon tax shifts MPC upward to align with MSC, reducing output toward the social optimum
- recommend subsidies for sanitation or education where MSB exceeds MPB on a diagram
- distinguish carbon taxes from tradable permits using plastic production examples