Ch 11 2.10 Market failure: asymmetric information (HL): complete notes

Neat, exam-ready notebook-style notes for Ch 11 2.10 Market failure: asymmetric information (HL), following the IB Diploma syllabus, SL and HL. This chapter is part of the complete Economics Notes for IB Diploma Students (SL and HL): All 30 Topics.

Cover of Economics Notes for IB Diploma Students (SL and HL): All 30 Topics

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Free preview: Ch 11 2.10 Market failure: asymmetric information (HL) notes

A quick look at the chapter from our IB Diploma Economics notes. The full chapter notes have the detailed explanations, diagrams and practice questions with answers.

Topics in this chapter

What you must be able to do
Asymmetric information AO2
Two forms in the guide
Adverse selection: the used-car market AO2
Adverse selection in insurance AO2 AO4
Other places to look for adverse selection
Moral hazard AO2 AO4
Responses to asymmetric information: government AO3
Limits of government action
Responses: signalling and screening AO3

“I can” checklist: what you must be able to do

HL: I can define asymmetric information and give examples where the seller or the buyer knows more.
HL: I can explain adverse selection with the used-car and insurance examples and draw the diagram.
HL: I can explain moral hazard, draw its welfare loss and say why private cost is below social cost.
HL: I can calculate a break-even premium and the effect of low-risk customers leaving.
HL: I can evaluate legislation and regulation, and provision of information, as government responses.
HL: I can explain and evaluate signalling and screening as private responses.

What is inside the full chapter notes

Concept notes with 7 worked examples (every number computed)
Diagrams: used-car market and moral hazard welfare loss
Government and private responses with "Applying it" evaluations
Common mistakes and a "How to score" command-term box
12 Quick-check questions A-D, explained
Paper 2 style data response with part (g) (32 marks) and mark scheme
Paper 3 style policy question (18 marks) with mark scheme
Quick reference and "I can" checklist

See real pages (free sample)

What you get in the pack

All 30 topics of IB Diploma Economics for students taking Standard Level or Higher Level (first assessment 2022): what economics is, demand, supply, market equilibrium, behavioural economics, elasticity, government intervention, externalities, public goods, asymmetric information, market power, equity, measuring economic activity, aggregate demand and supply, macroeconomic objectives, inequality and poverty, monetary policy, fiscal policy, supply-side policies, international trade, trade protection, economic integration, exchange rates, balance of payments, sustainable development, measuring development, growth and development strategies
Every syllabus statement covered in order, each marked SL or HL, with clear notes, tables and diagrams drawn for these notes
Every diagram the guide names, drawn and labelled, plus worked examples and model answers that show how to earn the marks
Quick-check multiple-choice questions with explained answers, plus original Paper 1 (extended response), Paper 2 (data response) and, for HL, Paper 3 (policy) style questions with full mark schemes (no past-paper reprints)
Common mistakes and a how-to-score command-term guide for every topic
Quick-reference sheet and an "I can" checklist at the end of every topic
Colour PDF and a black and white copy of every chapter for printing
Independent notes for IB Diploma students; not endorsed by or affiliated with the International Baccalaureate Organization (IBO)

All chapters in this pack

← Ch 10 2.9 Market failure: public goods Ch 12 2.11 Market failure: market power (HL) →