IB Economics Paper 3 (HL) Practice

Allocative inefficiency: As shown above, the monopoly produces where P > MC, leading to under-production and deadweight loss. Regulation could improve allocative efficiency.
Consumer welfare: The monopoly charges a high price ($60) and earns substantial supernormal profit ($85), which comes at the expense of consumers. Price regulation could lower prices and increase consumer surplus.
X-inefficiency: Without competition, monopolies may have less incentive to minimize costs or innovate.

Higher Level quantitative paper with calculations and policy questions.

HL Only

About Paper 3: Paper 3 is for Higher Level students only. It tests quantitative skills including calculations of elasticity, the multiplier, tariff welfare effects, costs and revenues, and theory of the firm. Questions involve data tables and require mathematical working. The paper is 2 hours and worth 40 marks.