Economics IB HL

Economics – Chapter 8 Practice Questions

Question 1 (p. 195)  1 a) Using a suitable diagram, explain the difference between short-run equilibrium and long-run equilibrium in perfect competition.  In the short-run, perfectively competitive firm will produce at the level of output at which the marginal revenue (MR) = marginal cost (MC), which is the profit-maximization rule. However, following this rule does … Continue reading

Economics IB HL

Economics – Chapter 5 Practice Questions

HL Exercises (p. 121) 35. 36. 44. What is the effect of price controls on allocative efficiency? Allocative efficiency is achieved when society produces enough of a good so that marginal benefit equals marginal cost, ie. when supply meets demand. Price controls which include price ceilings and price floors eliminates allocative efficiency in a competitive market. … Continue reading

Economics IB HL

“Japan Senior Spending Lifts” Extended Response

Senior Spending to Give Japan a Lift (The Wall Street Journal) 1. Explain which non-price determinant of demand is affecting the market. The non-price determinant of demand that is affecting the Japanese market is the consumers’ tastes and preferences. As Japan’s population rapidly ages, the market produces goods and services that suit the “senior generation” tastes and … Continue reading