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.
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2026
Define the term common pool resource.
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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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Overfishing in international waters is an example of:
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State one regulation a government could use to protect a shared fish stock.
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Define the term tradable permits.
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Identify the output at which community surplus is maximised on the diagram.
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A text reports that the forest around Talvane’s villages, which anyone may enter to cut wood, is a common pool resource.
Define the term common pool resource.
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Steelmakers can buy and sell their emission permits.
Define the term **tradable permits**.
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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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State one regulation that could protect a shared fish stock.
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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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An example of a negative externality of consumption is:
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A text explains that the fumes from Halden’s brick kilns affect villages that have no part in the trade.
Define the term negative externality.
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Draw the marginal social benefit curve on the externalities diagram.
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Power stations must hold a permit for every tonne of carbon they emit.
Define the term **tradable permits**.
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The government will raise its carbon tax next year.
Define the term **carbon tax**.
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Define the term negative externality.
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A carbon tax now applies to airlines.
Define the term **carbon tax**.
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A positive externality of consumption occurs when:
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