IB skill practice

Analyse allocative efficiency and welfare loss

Economics SL skill with original exam-style diagram, data-response, and evaluation seeds.

Paper 1, Paper 2 5 marks Difficulty 3

Interpret welfare loss from overallocation

A diagram in a local Australian competition inquiry shows output above the socially efficient quantity. Explain why welfare falls. Enter the answer and choose the interpretation that best matches the economic evidence.

Worked practice: economic evidence and answer

Identify the economic evidence first, then state the result and interpretation.