IB Economics Week 1

My Upper Sixth IB economists have today started their revision in preparation for their final exams in May. Over the coming eight weeks we will revisit all of the material through a combination of revision lectures, class discussion and past paper practice. I will post a weekly blog giving a check list of material covered and suggestions for possible exam questions which will hopefully be of use for students sitting the papers next term.

Revision Ticklist. Do you know…

The Basic Economic Problem
Factors of Production
Economic Systems
PPF and Opportunity Cost
Positive and Normative Statements

Demand (The law of demand, determinants, shifts in demand curve)
Veblen and Giffen goods
Supply (law, determinants, shifts in supply curve)
Equilibrium (S = D) and changes following shifts in S and D

Elastcity

Price Elastcity of Demand (formula and magnitude)
Diagrams of the different PEDs
PED and total revenue analysis
Determinants of PED
Cross Elasticity of Demand (XED) and its applications
Income Elasticity of Demand (YED) and its applications
Price Elasticity of Supply and determinants

Practice Exam Questions

Short Answers (marked out of 10)

1. A bus company decides to reduce passenger fares. Explain the possible outcomes of this decision using economic concepts.

2. Using demand and supply analyis, explain how resources are allocated through changes in price in a market economy.

3. Define cross elasticity of demand and using diagrams, explain what determines whether cross elasticity is positive or negative

4. Explain what is meant by a production possibility curve (PPC) and use a PPC to explain the concepts of scarcity, choice and opportunity cost.

Essay Questions

1 a) State the law of demand and distinguish between movements along the demand curve and shifts in the demand curve [10]

b) Explain with the help of diagrams, the effect that an increase in the price of petrol is likely to have on i) the market for cars ii) the market for public transport [15]

2 a) Carefully explain what it is that price, income and cross elasticities of demand are meant to measure [10]

b) Discuss the practical importance of the concept of price elastcity of demand for i) business organisations ii) the government [15]