Please answer all 7 questions!

Paper 1, part (a) questions - HL & SL Part (a) questions 1. Explain why imperfect information contributes to the overconsumption of demerit goods. [10 marks] 2. Explain why imperfect information contributes to the underconsumption of merit goods. [10 marks] Paper 1, part (a) questions - HL only 1. Explain how consumer nudges can reduce the market failure associated with demerit goods. [10 marks] 2. Explain how screening and signalling by firms can overcome the problem of adverse selection. [10 marks] Paper 1, full questions - HL & SL 1. a) Explain why negative externalities of consumption are a market failure. [10 marks] b) Using real-world examples, evaluate policies that could be used by governments to reduce the market failure associated with negative externalities of consumption. [15 marks] 2. a) Explain why the atmosphere is a common-pool resource, subject to the "tragedy of the commons". [10 marks] b) Using real-world examples, evaluate the role of market-based responses to managing common-pool resources. [15 marks] 3. a) Explain why the existence of positive externalities in a market is a case of market failure. [10 marks] b) Using real-world examples, evaluate to what extent governments should intervene in the market for merit goods. [15 marks]