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IB DIPLOMA PROGRAMME PROGRAMME DU DIPLÔME DU BI PROGRAMA DEL DIPLOMA DEL BI
M05/3/ECONO/HP1/ENG/TZ0/XX/M+
MARKSCHEME
May 2005
ECONOMICS
Higher Level
Paper 1
6 pages
-2-
M05/3/ECONO/HP1/ENG/TZ0/XX/M+
This markscheme is confidential and for the exclusive use of examiners in this examination session. It is the property of the International Baccalaureate and must not be reproduced or distributed to any other person without the authorization of IBCA.
-3-
M05/3/ECONO/HP1/ENG/TZ0/XX/M+
Paper Specific Markscheme
In addition to the assessment criteria, use the paper-specific markscheme below. Award up to the maximum marks indicated. Examiners should be aware that candidates may take a different approach, which if appropriate should be fully rewarded. 1. (a) Explain how profit is determined in perfect competition. • • • • • • definition of profit/normal profit/abnormal profit/loss definition of perfect competition abnormal profit in the short run only losses in the short run only normal profit in the short and long run diagrams to illustrate the above [10 marks]
Examiners should be aware that candidates may take a different approach, which if appropriate should be rewarded. (b) “Whatever the type of market structure, profit maximization will always be the only goal of firms.” Discuss. Points for discussion might include: • different market structures • explanation of profit maximization in terms of MC/MR, TC/TR • profit maximization in perfect competition and imperfect competition • profit maximization diagrams • importance of profit maximization in reality • other goals of firms, e.g. sales, volume or output maximization, revenue maximization, environmental concerns • managerial goals • preservation of dominant market position • collusion, creation of barriers to entry • contestable markets where firms may not profit maximize due to the threat of competition Examiners should be aware that candidates may take a different
IB DIPLOMA PROGRAMME PROGRAMME DU DIPLÔME DU BI PROGRAMA DEL DIPLOMA DEL BI
M05/3/ECONO/HP1/ENG/TZ0/XX/M+
MARKSCHEME
May 2005
ECONOMICS
Higher Level
Paper 1
6 pages
-2-
M05/3/ECONO/HP1/ENG/TZ0/XX/M+
This markscheme is confidential and for the exclusive use of examiners in this examination session. It is the property of the International Baccalaureate and must not be reproduced or distributed to any other person without the authorization of IBCA.
-3-
M05/3/ECONO/HP1/ENG/TZ0/XX/M+
Paper Specific Markscheme
In addition to the assessment criteria, use the paper-specific markscheme below. Award up to the maximum marks indicated. Examiners should be aware that candidates may take a different approach, which if appropriate should be fully rewarded. 1. (a) Explain how profit is determined in perfect competition. • • • • • • definition of profit/normal profit/abnormal profit/loss definition of perfect competition abnormal profit in the short run only losses in the short run only normal profit in the short and long run diagrams to illustrate the above [10 marks]
Examiners should be aware that candidates may take a different approach, which if appropriate should be rewarded. (b) “Whatever the type of market structure, profit maximization will always be the only goal of firms.” Discuss. Points for discussion might include: • different market structures • explanation of profit maximization in terms of MC/MR, TC/TR • profit maximization in perfect competition and imperfect competition • profit maximization diagrams • importance of profit maximization in reality • other goals of firms, e.g. sales, volume or output maximization, revenue maximization, environmental concerns • managerial goals • preservation of dominant market position • collusion, creation of barriers to entry • contestable markets where firms may not profit maximize due to the threat of competition Examiners should be aware that candidates may take a different