Example 1 — Opportunity cost, stated precisely

A government has €40 million and can build a hospital, a school or a road. It values them in that order. It builds the hospital. State the opportunity cost of this decision. [2]

The opportunity cost is the school, ✓ because it is the next best alternative forgone — the single most valuable option given up, not the total of all options not chosen. ✓

2/2.

The precision is the mark. "The school and the road" is wrong — opportunity cost is singular. "€40 million" is also wrong; the cost of a choice is measured in what you could have had, not in what you spent. And note that a question phrased as state still rewards the defining phrase, because it demonstrates you know why the school and not the road.

Example 2 — Explaining the shape of the PPC

Explain, using a diagram, why a production possibilities curve is normally drawn concave to the origin. [4]

[Diagram: capital goods on the vertical axis, consumer goods on the horizontal axis, both labelled with units; a curve bowed outward from the origin meeting both axes; two points marked on the curve showing equal increments of consumer goods costing increasingly large amounts of capital goods.]

The PPC shows the maximum combinations of two goods an economy can produce when resources are fully and efficiently employed. ✓ It is concave because of increasing opportunity cost: the factors of production are not equally suited to producing both goods. ✓ As the economy moves production toward consumer goods, it first transfers the resources best suited to that use; to expand further it must transfer resources that are progressively less well suited. ✓ Each additional unit of consumer goods therefore requires giving up a larger quantity of capital goods, which is what makes the curve bow outward rather than run straight. ✓

4/4.

The diagram is not illustration — it is assessed. Both axes labelled with the good and its unit, the curve correctly bowed, and points marked to show the increasing sacrifice. An unlabelled sketch scores nothing and can pull a strong written answer down a band.

The final sentence earns its mark by connecting the economics back to the shape, which is what the question actually asked. Answers that explain increasing opportunity cost without ever returning to why that makes the line curved routinely lose the last mark.

Example 3 — Positive and normative

Distinguish between positive and normative statements, using an example of each. [4]

A positive statement is factual and can be tested against evidence, whether or not it proves true, whereas a normative statement is a value judgement about what ought to be the case and cannot be tested. ✓✓ Positive: "Unemployment in Spain fell from 12.9 % to 11.6 % between 2023 and 2024." This can be checked against the data. ✓ Normative: "The government should reduce unemployment by increasing public spending." This contains a judgement about what is desirable, on which economists may reasonably disagree even when they agree on all the evidence. ✓

4/4.

The last clause is what elevates this. It answers the question behind the question — why the distinction matters — and it is exactly the point examiners reward: agreement on facts does not produce agreement on policy.

Note that a positive statement does not have to be true. "Raising taxes increases revenue" is positive even if evidence contradicts it, because it is the kind of claim evidence could settle. Students routinely define positive as "a true statement", which is wrong.

Example 4 — An "evaluate" answer, and what a judgement looks like

Evaluate the view that a free-market economy is the most effective way to allocate scarce resources. [6]

In a free-market economy, resources are allocated by the price mechanism through the interaction of demand and supply, with no central direction.

In favour. Prices act as signals and incentives, so resources move automatically toward goods consumers value most — achieving allocative efficiency without a planner needing to know what people want. Competition drives firms to lower costs, delivering productive efficiency, and the profit motive rewards innovation. Planned economies lacking price signals have historically produced persistent shortages and surpluses.

Against. Markets fail in identifiable ways. Public goods such as street lighting are non-excludable, so the market under-provides them. Externalities mean private costs diverge from social costs, so pollution is over-produced. Markets allocate according to purchasing power rather than need, so a free market can be efficient and still leave people without healthcare — which is the efficiency versus equity trade-off. Market power allows monopolies to restrict output and raise prices.

Judgement. The free market is an effective allocator where the conditions for it hold — competitive markets, well-defined property rights, no significant externalities, and goods that are rival and excludable. It is not effective where those conditions fail, which is why every real economy is mixed rather than purely market-based. Whether a given intervention improves matters depends on whether the government failure it introduces is smaller than the market failure it corrects.

Why this reaches the top band. Both sides are developed with course terminology used precisely. It names the concepts — allocative efficiency, externalities, equity — rather than gesturing at them. And the judgement is a real one: it identifies the conditions under which the claim holds, rather than concluding "there are advantages and disadvantages". A conclusion that could be written without reading the essay is not a judgement.

What would improve it further: a named real-world example. "The 2008 financial crisis" or "carbon pricing in the EU Emissions Trading System" would lift a good answer to a very strong one.

Educerie · original worked examples written against the published IB syllabus structure for Economics Unit 1, first assessment 2022. All scenarios are our own. Last reviewed 5 September 2026.