Practice 2.4 Critique of the maximizing behaviour of consumers and producers (HL only) with authentic IB Economics exam questions for both SL and HL students. This question bank mirrors Paper 1, 2, 3 structure, covering key topics like microeconomics, macroeconomics, and international trade. Get instant solutions, detailed explanations, and build exam confidence with questions in the style of IB examiners.
Explain how choice architecture can be used to influence market equilibrium.
Explain why firms may have alternative business objectives than profit maximisation.
Discuss the importance of price elasticity of demand and cross price elasticity of demand for a company’s decision making.
Explain why the price elasticity of demand for primary commodities is often relatively low while the price elasticity of demand for manufactured products is often relatively high.
Explain why the demand curve is downward sloping.
Using real-world examples, evaluate choice architecture as a method of reducing the consumption of demerit goods.
Explain the relationship between an individual consumer’s demand and market demand.
Using real-world examples, evaluate the view that the assumptions behind rational consumer choice have very few limitations.
Explain why the demand for basic raw materials might be price inelastic.
Using real-world examples, discuss the significance of price elasticity of demand (PED) for a government imposing an indirect tax on a product.
A country’s government is considering a subsidy program to promote renewable energy production. Use the following information to answer the questions:
The government plans to allocate $500 million in subsidies. The price elasticity of supply for renewable energy is 1.50.
Calculate the percentage increase in renewable energy output if the subsidy results in a 20% reduction in production costs.
Using real-world examples, discuss how this subsidy could impact market efficiency and equity in the long term.
To what degree might the notions of YED and XED be of importance for corporate entities?
Differentiate between the notions of income elasticity of demand (YED) and cross price elasticity of demand (XED).
Explain why companies in monopolistic competition are not allocatively efficient.
Using real-world examples, evaluate whether it is more beneficial for consumer a market for a market to be dominated by a single firm or shared by many small firms operating under monopolistic competition.
Explain the impact of a price floor in a farming market on consumers, producers, and the government.
Using real-world examples, evaluate the effectiveness of a price ceiling as a policy to protect low-income consumers.