What this practice covers
These questions are drawn from past IB Economics papers and filtered to market power. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
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What examiners see students get wrong here
These are the errors that cost marks on market power, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Drawing MR on top of the demand curve. For a straight-line demand curve, MR is twice as steep and lies below it.
- Reading the monopoly price off the MR curve. Find quantity where MR = MC, then read up to the demand curve for price.
- Confusing allocative with productive efficiency.
- Treating the whole loss of consumer surplus as deadweight loss, most of it is transferred, not destroyed.
- Condemning monopoly outright, ignoring economies of scale, dynamic efficiency and contestability.
- Recommending a price cap at MC for a natural monopoly without noting it causes losses.
- Assuming a single firm always has market power, regardless of entry conditions.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Market Power revision notes.