IB Economics Complete Review
IB Diploma Program Economics · 2027IB Economics Complete Review
- SL and HL
- 4 syllabus units
- Constructed responses only
- Paper 1 requires real-world examples
IB Economics connects scarcity and choice to markets, national economies, trade, exchange rates, and development. This guide organizes the four units around the decisions students must make in written responses: select the relevant model, label the representation, show calculations clearly, connect evidence to a claim, and qualify the final judgment.
International Baccalaureate publishes no per-unit percentage for IB Economics; Paper 1 accounts for 30% of the SL total and 20% of the HL total. The curriculum gives recommended teaching hours for the four units, but it does not turn those hours into official unit-by-unit exam shares. Keep all four units active in revision.
- Define before drawing. Name the market, economy, indicator, time period, and any condition that the model holds constant.
- Show the mechanism. Connect the event to the curve, calculation, stakeholder effect, and economic objective it changes.
- Evaluate conditionally. Compare groups and time horizons, then state the assumption that could change the judgment.
What IB Economics covers
The units appear in syllabus order, and the names and links below match the four unit pages. Each route joins its core decision to diagrams, calculations, common errors, formula cues, and independently written examples.
SL uses two papers and HL uses three
SL includes Paper 1, Paper 2, and an internal assessment portfolio. Paper 1 lasts 75 minutes and contributes 30%; Paper 2 lasts 105 minutes and contributes 40%; the internal assessment contributes 30%. HL adds Paper 3: Paper 1 lasts 75 minutes and contributes 20%, Paper 2 lasts 105 minutes and contributes 30%, Paper 3 lasts 105 minutes and contributes 30%, and the internal assessment contributes 20%.
| Level and component | Time | Weight | Response focus |
|---|---|---|---|
| SL Paper 1 | 75 minutes | 30% | Extended response across all units |
| SL Paper 2 | 105 minutes | 40% | Data response across all units |
| SL internal assessment | 20 recommended hours | 30% | Portfolio of three commentaries |
| HL Paper 1 | 75 minutes | 20% | Extended response across all units |
| HL Paper 2 | 105 minutes | 30% | Data response across all units |
| HL Paper 3 | 105 minutes | 30% | Policy paper across all units |
| HL internal assessment | 20 recommended hours | 20% | Portfolio of three commentaries |
There are no multiple-choice papers. Paper 1 answers need real-world examples; without them, the response cannot reach the highest level described by the course requirements. Check the official IB Economics subject brief for later changes. These details are stated as of 2026-10-09.
Draw and read a demand shift
Read each question as it appears on the exam paper, choose your answer, then tap it to see the feedback.
A bicycle-share market experiences a change in demand.
Weekly demand for rides is Qd = 100 − 5P and supply is Qs = 10P, where P is dollars per ride and Q is hundreds of rides. A new employer benefit changes demand to Qd = 120 − 5P. Calculate both equilibria and describe a diagram showing demand, supply, E0, E1, and the rightward shift.
Show your working.
Label the diagram fully.
A. Set demand equal to supply twice, keep supply fixed, and shift demand right from D0 to D1.
✅ Correct! 😊 This finds both market-clearing intersections and represents the employer benefit as a non-price demand determinant. The diagram and calculations will therefore show price and quantity rising together.
B. Set demand equal to supply once, then move down the original demand curve to a lower price.
❌ Not quite 😭 This treats the employer benefit as a price change. It misses the new demand equation, the second equilibrium, and the required rightward shift.
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C. Shift both demand and supply right, then label only the new intersection.
❌ Not quite 😭 No supply determinant changes, so moving supply invents a second cause. Omitting E0 also prevents a clear comparison of the two equilibria.
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D. Subtract supply from demand at P = 0 and use the result as the new equilibrium quantity.
❌ Not quite 😭 An intercept gap is not an equilibrium. Equilibrium requires Qd = Qs at each intersection, with the associated price and quantity both reported.
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Full explanation
- Step 1Originally, set 100 − 5P = 10P, giving P0 ≈ $6.67 and Q0 ≈ 66.7 hundred rides.
- Step 2After the benefit, set 120 − 5P = 10P, giving P1 = $8.00 and Q1 = 80 hundred rides.
- Step 3Draw Price and Quantity axes, leave S unchanged, and shift demand right from D0 to D1.
- Step 4Place E0 and E1 at the solved intersections and state that both equilibrium price and quantity rise.
A city introduces an indirect tax on disposable drink cups to reduce waste.
Using a demand-and-supply diagram and a real-world example, evaluate whether an indirect tax is likely to reduce consumption of disposable drink cups.
Support the response with economic reasoning.
Include a relevant real-world example.
A. Define the tax, show the supply shift and tax wedge, trace price and quantity effects, then evaluate elasticity, stakeholders, implementation, and alternatives before a conditional judgment.
✅ Correct! 😊 This plan makes the mechanism visible and then tests how strongly it will work. It supports a qualified conclusion with stakeholder effects, practical limits, and a relevant example.
B. State that taxes always reduce demand, draw demand shifting left, and conclude that waste must fall.
❌ Not quite 😭 The tax raises firms’ costs and creates a supply-side wedge; it does not itself shift demand. The absolute conclusion also ignores responsiveness and enforcement.
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C. List disadvantages for consumers and firms without drawing the market or explaining the price mechanism.
❌ Not quite 😭 A stakeholder list alone does not establish how the tax changes equilibrium. Without the mechanism, the effects are asserted rather than economically demonstrated.
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D. Describe one city’s policy in detail and treat lower cup use as proof that the tax caused the entire change.
❌ Not quite 😭 An example can support analysis, but description is not a causal chain. Other influences and the conditions affecting the tax’s size still need evaluation.
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Full explanation
- Step 1Define an indirect tax and show it shifting supply left or creating a vertical wedge between consumer and producer prices.
- Step 2Explain the higher consumer price, lower traded quantity, tax revenue, and possible changes in consumer and producer surplus.
- Step 3Use price elasticities to assess the size of the consumption fall and the division of the tax burden.
- Step 4Compare environmental benefits with equity, substitution, enforcement, and time-horizon limits, then reach a conditional judgment supported by an example.
Fifteen terms to use precisely
Use each definition as the start of an explanation, then connect the term to a model, calculation, diagram, stakeholder, or judgment. The terms below match the guide’s glossary.
- Scarcity
- The condition that limited resources cannot satisfy every possible use.
- Marginal benefit
- The additional benefit created by one more unit of an activity.
- Allocative efficiency
- Using resources where marginal social benefit matches marginal social cost.
- Injection
- Spending added to the domestic circular flow through investment, government spending, or exports.
- Demand
- Quantities consumers are willing and able to buy at alternative prices over a period.
- Price elasticity of demand
- Responsiveness of quantity demanded to a percentage change in price.
- Tax incidence
- The division of an economic tax burden between buyers and sellers.
- Public good
- A good that is non-excludable and non-rival in consumption.
- Nominal GDP
- The value of domestic final output measured at current prices.
- Inflation
- A sustained rise in a broad price level.
- Multiplier
- The ratio of the total income change to an initial autonomous spending change in a simple model.
- Potential output
- The sustainable production level associated with available resources and productivity.
- Quota
- A quantitative limit on imports or another controlled activity.
- Depreciation
- A decrease in a currency’s value measured by how much foreign currency it buys.
- Terms of trade
- An index of export prices relative to import prices.
What to expect and how to use this guide
Are the examples copied from official IB questions?
No. The situations, wording, values, calculations, and diagrams are independently written for teaching and practice.
Does the public material used here include released questions?
No. It identifies topics and paper formats but provides no released questions, scoring guides, examiner reports, or response statistics.
Is a formula sheet supplied?
The public subject brief used for this guide does not say. Students should check current examination instructions with their school.
How long are the SL papers?
SL Paper 1 is 75 minutes and SL Paper 2 is 105 minutes.
How long are the HL papers?
HL Paper 1 is 75 minutes, HL Paper 2 is 105 minutes, and HL Paper 3 is 105 minutes.
Is this guide produced or endorsed by International Baccalaureate?
No. This is an independent AskSia study guide. AskSia is not affiliated with or endorsed by the International Baccalaureate Organization. IB and International Baccalaureate are registered trademarks of the International Baccalaureate Organization.
What is the official IB Economics exam structure?
SL: External Assessment (70%); Paper 1 (75 min, 30%); Paper 2 (105 min, 40%); Internal Assessment (30%) | HL: External Assessment (285 min, 80%); Paper 1 (75 min, 20%); Paper 2 (105 min, 30%); Paper 3 (105 min, 30%); Internal Assessment (20%). These figures come from the current International Baccalaureate specification; where International Baccalaureate does not publish a per-unit weighting, this guide does not invent one.
Build a repeatable route from model choice to evaluation
Pass 1 — identify the economic job. Decide whether the prompt asks you to define a concept, draw and explain a model, calculate and interpret a measure, analyze data, or evaluate a policy. Mark the command term, the market or economy, the time horizon, and the affected groups before choosing a method.
Pass 2 — make the representation auditable. Label both axes, curves, equilibria, shifts, price lines, areas, or table headings. For calculations, write the relationship first, substitute values with units, delay rounding, and interpret the result in the setting of the question.
Pass 3 — build causal chains. Do not stop at “demand rises” or “inflation falls.” Name the determinant, show what shifts or changes, state the new model outcome, and trace the effect to households, firms, government, or other stakeholders.
Pass 4 — evaluate with conditions. Compare short-run and long-run effects, winners and losers, likely size, time lags, information limits, implementation, and alternative policies. End with a judgment whose condition is explicit.
Practice the paper differences. SL uses Paper 1 and Paper 2 plus internal assessment; HL adds Paper 3. There are no multiple-choice questions. Paper 1 responses need relevant real-world examples, so prepare examples as evidence attached to a mechanism rather than as isolated names.
Mix all four units. International Baccalaureate does not publish per-unit exam percentages. Alternate focused repair with mixed written practice, and keep an error log that records the first decision that should have been made.
AskSia is not affiliated with or endorsed by the International Baccalaureate Organization. IB and International Baccalaureate are registered trademarks of the International Baccalaureate Organization. Exam structure is based on official International Baccalaureate information as of 2026-10-09; every practice situation, value, calculation, and diagram in this guide is independently written for learning.