48 exam-style questions on Market failure: market power — topic 2.11 of Microeconomics in the IB Economics syllabus — with answers and explanations. Samples below; the full set is free with an account.
Which of the following is a variable cost for a manufacturer?
Answer: raw materials
Variable costs change with output. Raw material use rises as more units are produced; rent, insurance and fixed-loan interest do not vary with output.
The MC curve cuts which pair of curves at their minimum points?
Answer: ATC and AVC
MC intersects ATC and AVC at their minimums. AFC never has a minimum (it falls continuously), and TFC/TVC are total, not average, curves.
A profit-maximising firm produces at the output where:
Answer: MC = MR
Profit is maximised where MC = MR (with MC rising through MR). Below this output MR > MC (produce more); above it MC > MR (produce less).
Which is a defining characteristic of perfect competition?
Answer: many firms, homogeneous product
Perfect competition: many small firms, a homogeneous product, freedom of entry and exit, and perfect information. Firms are price takers.
Which of the following is a barrier to entry that helps a monopoly persist?
Answer: control of an essential resource
Barriers to entry include control of a key resource, legal barriers (patents/licences), high sunk costs and economies of scale. They allow the monopolist to earn long-run abnormal profit.
Which feature best describes monopolistic competition?
Answer: many firms, differentiated products, low barriers to entry
Monopolistic competition: many firms, product differentiation (some price-setting power), and low barriers to entry, so only normal profit is earned in the long run.
That was 6 of 48 Market failure: market power questions.
Practise all 48 freeDrawAO4 · 1–4 marks
A labelled, accurate drawing with a ruler where lines are straight; axes and units on a graph.
ExplainAO2 · 2–10 marks
Give reasons or causes: say what happens AND why, linking each step with 'because' or 'so that'.
StateAO1 · 1–2 marks
One word or one short sentence. No explanation, no working: the mark is for the fact itself.
48 Market failure: market power questions — free with an account. Spaced repetition, streaks and full exam simulations included.
Practise them freeThis platform is independently developed and is not endorsed by, affiliated with, or sponsored by the International Baccalaureate Organization. “International Baccalaureate” and “IB” are registered trademarks of the IBO.