IB Econ- Practice Questions

I selected a few from the list that are pretty typical of IB exam questions:

4.10 A government wants to provide income support for farmers, and is debating whether to provide subsidies or price floors for agricultural products with government purchases of the excess supplies.

(a) Explain the effects of the two policies on the quantity of the good produced and on allocative effi ciency. [10 marks]

(b) Compare and contrast the effects of each policy on market outcomes and stakeholders. [15 marks]


4.15 (a) Using diagrams, explain how the incidence (burden) of indirect taxes on consumers and producers is affected by the price elasticity of demand and the price elasticity of supply of the particular goods being taxed. [10 marks]


5.1 (a) Analyse the meaning of ‘market failure’, using the concept of allocative effi ciency. [10 marks]


5.16 (a) Explain how merit goods and public goods each represent a type of market failure. [10 marks] (b) Discuss alternative policies that governments can pursue to deal with each of these types of market failure. [15 marks]


5.12 (a) Explain how the provision of subsidies can help correct positive consumption externalities resulting from the consumption of education services. [10 marks] (b) Compare and contrast alternative policies that might be used by government in an effort to correct positive consumption externalities. [15 marks]


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