Practice IB Economics Topic 2.11 Market Failure - Market Power with authentic exam-style questions for both SL and HL students. This question bank focuses on the exact syllabus content for 2.11 Market Failure - Market Power and mirrors Paper 1, 2, 3 style where relevant.

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Paper

Level

Question 1

HLPaper 1

(a)

Explain the characteristics of an oligopoly market.

[10]

Question 2

HLPaper 1

(a)

Using a payoff matrix, explain how game theory can demonstrate why firms in an oligopoly may fail to sustain collusive agreements.

[10]

(b)

Discuss the view that collusion between firms in oligopolistic markets is inevitable, using real-world examples.

[15]

Question 3

HLPaper 1

(a)

Explain why firms in oligopolistic markets often engage in significant non-price competition.

[10]

(b)

Discuss the view that non-price competition between firms in oligopolistic markets benefits consumers, using real-world examples.

[15]

Question 4

HLPaper 1

(a)

Using a diagram, explain why a profit-maximising monopolist creates allocative inefficiency.

[10]

(b)

Discuss the view that the welfare loss caused by monopoly is the most significant problem associated with market power, using real-world examples.

[15]

Question 5

HLPaper 1

(a)

Explain how the principle of diminishing returns affects a company's short-term cost curves.

[10]

(b)

Using real-world examples, discuss the view that monopoly is an unfavorable market structure as it fails to achieve productive and allocative efficiency.

[15]