Unit 2: Microeconomics
Topic 2.8: Market Failure — Externalities and Common Pool Resources Questions
Practice 20 exam-style questions for IB Economics Topic 2.8. Review the question stems below, then unlock the full Question Bank to access markschemes, model answers, and AI grading.
14 marks
Define positive externality and give one example of a positive externality of production and one of consumption.
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An example of a negative externality of consumption is:
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Define positive externality and give one example of a positive externality of production and one of consumption.
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Define negative externality and give one example of a negative externality of production and one of consumption.
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Education is often cited as a good with positive externalities because:
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Overfishing in international waters is an example of:
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A positive externality of consumption occurs when:
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Overfishing in international waters is an example of:
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A negative externality of production occurs when:
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Education is often cited as a good with positive externalities because:
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A negative externality of production occurs when:
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An example of a negative externality of consumption is:
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Define negative externality and give one example of a negative externality of production and one of consumption.
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A positive externality of consumption occurs when:
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Common pool resources are characterised by being:
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Explain two possible government responses to negative externalities of production.
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Explain two government policies that could increase the consumption of goods with positive externalities.
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A government subsidy to correct the underconsumption of a good with positive externalities aims to:
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Explain the concept of marginal external cost using an example.
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When positive externalities exist, the free market will:
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