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Essential things you must know about IB economics and how an IB tutor can help you

The IB economics syllabus is designed to give students a good introduction to economics. The course focuses on teaching fundamental key concepts and theoretical models. In this blog post, we will briefly explain the IB Econ course and how an IB tutor can help you get a 7.

The course is broken down in the 4 main parts.

Part 1: Microeconomics

This part of the course deals with how markets work. Students will learn abut the fundamentals of Microeconomics. For students who plan to study Economics in university, this part of the course serves as a very good foundation.

Here are the main chapters:

- Demand and supply: in this chapter, students will learn about the construction of the demand and supply curve and the factors that shift the curves. Moreover, students will learn about how the demand and supply interacts in a market. Students will understand how and why prices change in a market. Furthermore, students will learn to draw the supply and demand diagrams to understand

- Elasticity: Students will learn about four types of elasticities: price elasticity of demand, price elasticity of supply, cross elasticity of demand, and income elasticity of demand. Students will learn how these elasticities are calculated and what they measure. Moreover, they will learn how to interpret different values of elasticity.

- Government intervention: in this chapter, students will learn about the various ways in which the government can influence the market. The 3 types of government interventions learnt are indirect tax, price controls and subsidies. Students will learn how these methods of interventions influence the free market. Moreover, students will understand the purpose behind various government interventions and how to evaluate the pros and cons of each policy in different situations. Furthermore, students will learn how to draw diagrams to show how various types of government intervention affects a market

- Market failure: This is probably one of the most important chapters in microeconomics as it is the one that is most commonly tested. Students will learn about different kinds of market failure, including externalities, common access resources, public goods, asymmetric information and excessive monopoly power. Firstly, students will learn how these various situations leads to an inefficient allocation of resources in a free market. Secondly, students will learn how to draw diagrams to illustrate the various types of market failure. Thirdly, students will learn about the solutions to market failure. Lastly, students will learn to evaluate the different solutions to each type of market failure and their advantages as well as disadvantages.

- Theory of firm part 1 (Cost profit revenue): This is the first section in the theory of the firm chapter and is also frequently tested. In essence, students will learn the cost, revenue and profit behaviour of typical firms and theories that explain it. In the cost part, students will learn about the law of diminishing returns which dictates short term costs and economies of scale which explains long term costs behaviour. For the revenue part, students will learn how pricing decisions of firms can affect its total revenue. For the profit part, students will learn about the theories behind economic profit and accounting profit, which helps a firm to decide whether it is worthwhile to run its business. For all of these sections mentioned above,

- Theory of firm part 2 (market structures): students will learn about the 4 main types of market structures, including monopoly, perfect competition, monopolistic competition and oligopoly. Firstly, the characteristics behind each type of each type of market structure will be taught. Secondly, diagrams and economic theories involving each type of market structure will be taught. Thirdly, students will learn to evaluate the pros and cons of each market structure. At the end of this chapter, students will have a better understanding regarding various types of markets

Part 2: Marcoeconomics

Macroeconomics is the study of the macroeconomy. In the IB Economics course, students will learn all the fundamental concepts macroeconomics. The course serves as a good foundational course for university macroeconomics course.

Here are the main chapters in this unit:

- Measuring economic activity: In this chapter, students will learn about the different methods to measure the real output and the economic activity in an economy, such as GDP, GNP, GDP per capita, Green GDP etc. Moreover, students will learn about the circular flow of income diagram and understand this basic framework describing the macroeconomy. Furthermore, students will learn to evaluate the different methods of measuring economic activity, and understand the limitations and weaknesses when it comes to the various methods of measuring economic activity. Lastly, students will learn about the business cycle and understand how economic activity of an economy tends to be in cycles

- Inflation: In this chapter, students will learn many fundamental concepts about inflation. Firstly, the definition of inflation and method of measuring inflation will be taught. Secondly, students will explore the weaknesses and limitations of the conventional method of measuring inflation. Thirdly, students will learn about the two main types of inflation: cost-push inflation and demand-pull inflation.

- Unemployment: In this chapter, students will be exposed to the fundamental economic concepts related to unemployment. To start, students will learn about the definition of unemployment and the method of measuring unemployment. Then, students will learn about the difficulties when it comes to measuring unemployment, such as discouraged workers, underemployed workers and workers who purposefully conceal their employment status. Lastly, students will learn about the various types of unemployment, including cyclical unemployment, structural unemployment, seasonal unemployment, frictional unemployment and real wage unemployment.

- Income equity: This chapter is designed to give students an overall understanding of economic theories related to income distribution in a country. Firstly, students will learn how to plot, interpret and analyse a Lorentz Curve. Then, students will learn the difference between income equity and income equality. Lastly, students will learn about the various policies that governments can use to redistribute income, including transfer payments, supply side policies, price controls.

- Demand side policies: This chapter is designed to teach students the two types of policies to manipulate the aggregate demand in an economy: monetary policy and fiscal policy. Firstly, students will learn the economic theory and mechanism behind how monetary policy and fiscal policy affects the aggregate demand. Secondly, students will learn how the 2 types of demand side policies are used to help the economy meet various macro economic objectives, including low and stable inflation, low and stable unemployment, stable economic economic growth and income equity. Thirdly, students will learn about the pros and cons of the different types of demand side policies, and to evaluate them when used to meet macro economic objectives

- Supply side policies: Students will first learn about the the various types of supply side policies, which can be classified into two categories: market oriented supply side policies and interventionist supply side polices. Then, students will learn how supply side policies can help to meet the various macroeconomic objectives.

- Economic growth: This is another chapter on a macro objective. Firstly, students will learn about the definition of economic growth, and how it is measured. Then, students will learn about the benefits and potential costs of economic growth.

Part 3: international trade

In the international trade topic, students will learn about the economic theories related to economic trade. Again, it is a good introduction to university international economics.

Here are the major topics learnt:

- Comparative advantage and absolute advantage: these are 2 classic economic theories that explains why countries should trade. The IB syllabus will teach these 2 concepts in detail, allowing students to understand the diagrams to illustrate these concepts and the application of these concepts

- Protectionism: This topic is high relevant in today’s society with the rise of protectionism. Students will learn about the different forms of protectionism, including tariffs, subsidies, quotas and administrative barriers and the diagrams to illustrate all of these forms of protectionism. With the application of diagrams, students will understand how the various forms protectionisms affects the different stakeholders, including the domestic producers, the foreign producers, the government, the consumers and the economy at large. More important, students will learn to evaluate the various forms of protectionism, in terms of their advantages and disadvantages.

- Exchange rates: Students will learn a wide range of concepts related to exchange rates. Firstly, students will understand the different types of exchange rate systems, including a floating exchange rate system, a fixed exchange rate system and a managed exchange rate system. Secondly, students will explore the various factors that will cause exchange rate changes, such as changes in interest rates, changes in exports etc. Students will need to be able to apply these concepts in real life situations and predict how certain events will cause changes in the exchange rates of a country with the aid of diagrams. Then, students will learn how exchange rate changes can impact the macroeconomy and its ability to meet macro objectives

- Balance of payments: Students will learn about the major accounts in a country’s balance of payments and also, learn to evaluate policies to fix balance of payment problems

- Trading blocs: various forms of trading blocs, such as custom union, monetary union will be explored. Students will also learn to evaluate the benefits and costs of various trading blocs

Part 4: Development

This is a broad topic involving how developing countries can develop their economies.

There are a rather wide range of topics that will be taught, including:

- The definition of development and the difference between economic development and economic growth

- The different indicators that can help to measure a country’s standard of living, such as the HDI, life expectancy, average year of schooling etc.

- Different policies that can help boost a country’s economic development, such as export oriented policies, import substitution etc.

- The debate on market oriented policies versus interventionist policies. Students will study the pros and cons both of these broad policy approach.

Each part of the course is tested in a different manner, which our IB tutor will teach in a very meticulous way:

- For micro and macroeconomics, it will be mainly tested in paper 1 and paper 3 (for HL students only). In paper 1, there will be 2 microeconomic questions and 2 macroeconomic questions. Students need to pick 1 for each section. Each question is divided into 2 parts, part a and b. Part a is normally 10 marks and requires students to explain an economic concept. Part b, on the other hand, is generally worth 15 marks and involves evaluation. For the paper 3, students are required to answer calculation based questions.

- For international and development economics: These 2 sections are tested in paper 2 and 3. In paper 2, students will pick 1 out of 2 questions for both international economics and development economics. The question is based on a newspaper article and students need to answer a total of 4 questions.

Our IB tutor for IB economics is focused on breaking down economic concepts and teaching exam skills to help boost their grades. To register for a free trial, click here

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