IB Diploma · session May 2027
Economics
Guide first assessed in May 2022.
31 subtopics325 diagrams164,108 words
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The higher-level subtopics are hidden, and so is the higher-level material inside the rest.
Unit 1 Introduction to economicsTest setThe theoryWorked examplesPractice testMark scheme
Unit 2 Microeconomics
- 2.1 Demand how do consumers make choices when they cannot have everything?
- 2.2 Supply what decides how much firms are willing to produce, and what makes them change their minds?
- 2.3 Competitive market equilibrium what settles the price and the quantity actually traded, and why does a market refuse to sit still at any other price?
- 2.4 Critique of the maximizing behaviour of consumers and producers do consumers and firms really maximise, and what follows when they do not?
- 2.5 Elasticities of demand we know buyers respond to price and to income, but by how much?
- 2.6 Elasticity of supply when the price of something rises, how quickly and how far can producers actually supply more of it?
- 2.7 Role of government in microeconomics what happens to a market, and to the people in it, when a government changes the price or the quantity by force?
- 2.8 Market failure—externalities and common pool or common access resources what happens when a price leaves out part of the cost or part of the benefit, and what can a government do about it?
- 2.9 Market failure—public goods why does the market supply none of some goods everybody wants, and who supplies them instead?
- 2.10 Market failure — asymmetric information when are markets unable to satisfy important economic objectives, and does government intervention help?
- 2.11 Market failure—market power what happens to price, output and welfare when a firm is big enough to choose its own price?
- 2.12 The market's inability to achieve equity when are markets unable to satisfy important economic objectives, and does government intervention help?
Unit 3 Macroeconomics
- 3.1 Measuring economic activity and illustrating its variations how do we measure how much an economy produces, and how much does that number tell us about whether people's lives are getting better?
- 3.2 Variations in economic activity—aggregate demand and aggregate supply why does an economy's total output rise and fall, and what decides whether extra spending buys more output or only higher prices?
- 3.3 Macroeconomic objectives what is a government trying to achieve with the economy, and why can it almost never achieve all of it at once?
- 3.4 Economics of inequality and poverty why do some people in the same economy have so much more than others, and what can a government do about it?
- 3.5 Demand management (demand-side policies) — monetary policy how can one institution steer a whole economy by moving a single interest rate?
- 3.6 Demand management—fiscal policy how does a government use the money it raises and the money it spends to steer the whole economy?
- 3.7 Supply-side policies how does a government raise what a country is able to produce, instead of only how much it spends?
Unit 4 The Global Economy
- 4.1 Benefits of international trade why would a country buy from abroad something it could perfectly well make itself?
- 4.2 Types of trade protection when a government protects an industry, what exactly does it do to the market, and who ends up paying for it?
- 4.3 Arguments for and against trade control/protection trade makes a country richer in total, so why does almost every government in the world restrict it?
- 4.4 Economic integration what do countries agree to when they decide to trade as a group rather than as strangers?
- 4.5 Exchange rates what decides how much of one currency you have to give up to get another, and what happens to an economy when that number moves?
- 4.6 Balance of payments how do we keep score of everything a country buys from, sells to, borrows from and lends to the rest of the world?
- 4.7 Sustainable development can living standards be raised now without taking those standards away from the people who come after?
- 4.8 Measuring development if development is more than output, what numbers do we use instead, and what does each one still fail to see?
- 4.9 Barriers to economic growth and/or economic development when growth and development stall, what is holding them back, and how does it keep holding them back?
- 4.10 Economic growth and/or economic development strategies once you know what is holding an economy back, what can actually be done about it, and how do you judge whether it worked?
Nothing matches that.
The course in one page
The course in one page. Standard and higher level, for the guide first assessed in May 2022 — the guide May 2027 candidates sit.
What the course is
Economics is the study of how societies allocate scarce resources between unlimited wants. The course is built around nine key concepts that recur in every unit, and which the IB expects you to use explicitly by name:
scarcity · choice · efficiency · equity · economic well-being · sustainability · change · interdependence · intervention
These are not decoration. Paper 1 questions are often framed around a concept, and an answer that names and applies the relevant concept reads immediately as a stronger answer than one that does not.
The four units
| Unit | What it covers | |
|---|---|---|
| 1 | Introduction to economics | scarcity, the PPC, economic systems, the nine concepts |
| 2 | Microeconomics | demand and supply, elasticity, market failure, government intervention |
| 3 | Macroeconomics | measuring activity, AD/AS, unemployment, inflation, policy, growth, inequality |
| 4 | The global economy | trade, protectionism, exchange rates, balance of payments, development |
Unit 1 is short but load-bearing: scarcity and opportunity cost are the reason every other unit exists, and the PPC diagram reappears in growth and in development.
The papers
| Standard level | Higher level | |
|---|---|---|
| Paper 1: extended response | 75 min, 25 marks — 30% | 75 min, 25 marks — 20% |
| Paper 2: data response | 105 min, 40 marks — 40% | 105 min, 40 marks — 30% |
| Paper 3: policy paper | — | 105 min, 60 marks — 30% |
| Internal assessment: portfolio | 20 hours, 45 marks — 30% | 20 hours, 45 marks — 20% |
Papers 1 and 2 at standard level are set on the syllabus excluding the HL extension material, which is why every section in these notes marked HL only says an SL paper cannot ask for it.
Paper 1 is two-part extended response: part (a) explains, part (b) evaluates. It is the paper where diagrams and real-world examples carry the most weight.
Paper 2 gives you a text and data about a real economy and asks you to interpret it. Answers must refer to the extract — a technically correct answer that ignores the text loses marks.
Paper 3 is higher level only and is genuinely different: it is quantitative and policy-focused, requiring calculation and then a recommendation with justification.
The portfolio
The internal assessment is the same at both levels: a portfolio of three commentaries, each written on an article from published news media, each no longer than 800 words. It is worth 30% at standard level — the largest single component there — and 20% at higher level.
Four rubric rules decide marks before the economics is read. Each commentary must use a different unit of the syllabus and Unit 1 is not allowed; a different key concept, named; and a different source, publishing the article no earlier than one year before the commentary was written. Every commentary records the article title, its source, its publication date, the date the commentary was written, the word count, the syllabus unit and the key concept.
Each commentary is marked out of 14: diagrams 3, terminology 2, application and analysis 3, key concept 3, evaluation 3. The portfolio as a whole then carries 3 more marks for rubric requirements, which is where the four rules above are enforced. Three commentaries plus the rubric mark make 45.
Diagrams, labels of five words or fewer, tables of statistical data, equations and calculations, and citations and references do not count towards the 800 words. Definitions and quotations do.
How it is marked
Longer answers use mark bands, and four things move you up them:
Diagrams, drawn properly. A diagram must have both axes labelled with the variable and its unit, curves labelled, and the equilibrium and any shift clearly marked with arrows. An unlabelled diagram earns nothing. A correctly labelled diagram often earns marks even when the prose is thin.
Real-world examples, named. "A country might impose a tariff" is generic. "The United States imposed tariffs on imported steel in 2018" is a real-world example. The difference is worth a band.
Definitions of the key terms in the question. Cheap marks, routinely skipped.
Genuine evaluation. Not a paragraph of advantages followed by a paragraph of disadvantages, but a judgement that depends on something — the time period, the elasticity, the assumption, who bears the cost. "It depends on..." is the most valuable phrase in this subject, provided you then say what it depends on.
Assessment objectives
| Roughly | ||
|---|---|---|
| AO1 | Knowledge and understanding | define, list, outline |
| AO2 | Application and analysis | explain, analyse, apply to a given economy |
| AO3 | Synthesis and evaluation | discuss, evaluate, justify, compare and contrast |
| AO4 | Selection, use and application of skills | calculate, draw diagrams, interpret data |
Command terms, and what each one obliges you to write
| Term | What must appear on the page |
|---|---|
| Define | A precise meaning. |
| List / State | The answer alone. |
| Outline | A brief account, main points only. |
| Describe | What happens. No why. |
| Distinguish | Differences set against each other. |
| Explain | The reason or mechanism, usually with a diagram. |
| Analyse | Break the issue into parts and show how they relate — cause and effect. |
| Compare and contrast | Similarities and differences. |
| Discuss | A balanced review of more than one view. |
| Evaluate | Strengths and limitations, then a supported judgement. |
| Examine | Consider the issue and its underlying assumptions. |
| Justify | Reasons for a chosen position. |
| To what extent | A judgement with a degree — never simply yes or no. |
| Calculate | A numerical answer, working shown, with units. |
| Draw | An accurate, fully labelled diagram. |
Educerie · written from the published IB Diploma Programme structure for Economics, first assessment 2022. Original text. Paper durations and mark totals checked against the May 2027 examination schedule. Last reviewed 5 September 2026.