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v0.1.634
NotesEconomicsTopic 2.10
Unit 2 · Microeconomics · Topic 2.10

IB Economics — Market failure: asymmetric information

Adverse selection, moral hazard, and solutions such as regulation and disclosure.

Exam technique guidePractice questions

Key concepts in Market failure: asymmetric information

Key Idea: Topic 2.1 explains what demand is, why the demand curve slopes downward, what shifts it, and the crucial exam skill of distinguishing movements vs shifts.

✅ Core definitions

If a question says 'want' without 'able to buy', it is NOT effective demand.

📉 Why demand slopes downward

🔄 Non-price determinants (shift the curve)

⚡ Movements vs shifts — the KEY exam skill

Every time you draw a demand diagram, label: axes (P, Q), curve (D₁, D₂), direction of shift, and new equilibrium.

What you'll learn in Topic 2.10

  • 2.10.1 Asymmetric information and market failure
  • 2.10.2 Solutions to asymmetric information
Suggested study order: Read the notes for each sub-topic below → test yourself with flashcards → attempt practice questions → review exam technique.

Study resources — 2.10 Market failure: asymmetric information

2.10.1

Asymmetric information and market failure

Notes
2.10.2

Solutions to asymmetric information

Notes

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Topic 2.10 Market failure: asymmetric information forms a core part of Unit 2: Microeconomics in IB Economics. Mastering these concepts will strengthen your understanding of connected topics across the syllabus and prepare you for exam questions that require analysis, evaluation, and real-world application.

Frequently asked questions

What does Topic 2.10 Market failure: asymmetric information cover in IB Economics?
Topic 2.10 covers market failure: asymmetric information as part of the IB Economics syllabus. Students learn key economic concepts, models, and real-world applications that are assessed in Paper 1, Paper 2, and Paper 3 exams.
How should I revise Market failure: asymmetric information for IB Economics exams?
Start by reading the micro-topic notes to understand each concept, then use flashcards to memorise key terms and diagrams. Practise drawing and explaining economic models, and work through past paper questions to apply your knowledge under exam conditions.
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