ib economics paper 1 sample essay

10 Mark Paper 1 Sample Answer for IB Economics HL

Anyone can score top marks in a 10 mark question.

But what stops people from doing well? What does a model answer look like?

Below I give a model answer for a 10 mark or part (a) question.

This is for IB Economics Paper 1 Higher Level (not paper 3, which needs a different structure).

For 24 model answers to 15 mark paper 1 questions, check out the links below:

On this website there is also a free sample model answer for a 15 mark question and more IB Economics HL tips.

To check these out, click the blue buttons below:

Key criteria

In a 10 mark question for paper 1, a top answer must:

• Answer the question
• Explain relevant economic theory (chains of analysis)
• Use relevant economic terms.
• Where relevant, include and explain diagrams.

Note no evaluation is required for this question. There is also no need for real world examples.

Here is the question for the sample answer:

Explain the effects of a subsidy (10 marks)

I have kept the question simple. This is in order to focus on exam technique.

Here is a brief plan for our response:

• Subsidy definition.
• Graph including incidence of subsidy.
• Effects on producers – profits, investment, employment.
• Negative effects on producers – dependence and picking winners.
• Effects on government – opportunity cost and budget position.

I will cover subsidies through the market of solar panels. Here is an article discussing the example of a solar panel subsidy in Germany.

There is no requirement for real world examples in the 10 mark question in the syllabus. Here, your analysis is more important, though you can use an example market to guide you.

Sample answer

A subsidy is a government payment to a firm to encourage production of a particular good. I assume the subsidy is a per-unit subsidy – a fixed payment per unit the firm produces.

Suppose the government subsidises solar panels. The diagram shows the effect of a subsidy on the market for solar panels.

This leads to a shift right in the supply curve of solar energy from S to S1. This leads to a fall in price for solar energy from p to p1, and a rise in the quantity of solar energy used in equilibrium from q to q1. The area shaded in red shows the consumer incidence of the subsidy and the area shaded in blue shows the producer incidence. Given the demand for solar energy is likely to be price-elastic, as there are lots of substitutes, the firm is likely to receive the greater incidence from the subsidy compared to the consumer. That means that firms benefit more from the subsidy than the consumers.

Producers of solar panels benefit from the subsidy and see higher producer surplus. This means higher profits which is likely to mean higher reinvestment by firms. Also the quantity supplied has increased. As demand for labour is derived demand, it is likely that demand for workers will increase too. This leads to higher employment. Subsides may encourage firms to become dependent on the subsidy money to make a profit. This could reduce investment and innovation at the firm. If the subsidy were removed in the future, the firm may end up being less productive and fail.

Subsidies may also distort competition by ‘picking winners’. If only selected solar panel firms (or even selected industries) are subsidised, those firms (or industries) gain a cost advantage over other firms (or industries). Rather than letting firms compete in terms of price and non-price factors, subsidies could support failing firms, giving them a cost advantage over otherwise profitable firms, depending on how the subsidy is targeted.

The subsidy requires an increase in government spending. This comes with an opportunity cost, the next best alternative foregone when the government decides to spend more on subsides, which could be education or healthcare spending for example. If the government does not cut other spending or raise taxes, then subsidies increase the budget deficit. This means higher debt interest payments and a worse credit rating for the government using the subsidies.

This answer meets all the criteria for a top level responses. Specifically it has the following:

• The response fully addresses the question.
• Relevant economic theory – incidence, subsidy diagram, chains of reasoning.
• Relevant economic terms – consumer and producer surplus, incidence, subsidy and opportunity cost.
• The answer includes and explains an appropriate diagram.

Hence this answer would score full marks or close to it.

Other possible points

Other possible points include:

• Correcting market failure where the subsidy corrects a negative externality, for example.
• Market power may influence the degree to which the subsidy is passed on to consumers. More generally factors that influence the burden of subsidises, such as the price elasticities of demand and supply.
• Effects on other related markets, for example the effects of subsidies on complements and substitutes.
• Effects on product quality.
• Welfare loss from subsidy itself.
• Other related issues.

Other questions

How much time should you spend on an ib economics 10 mark question for paper 1.

For paper 1 there is one hour 15 minutes in total.

So, proportionally, you should spend 30 minutes on the 10 mark question.

However the 10 mark question is usually easier and less demanding than the 15 mark question.

So I recommend spending 20-25 minutes on the 10 mark question.

If you have more time, you can always come back to add more to the answer.

How many points should you make in an IB Economics 10 mark question for paper 1?

Typically I recommend four points. That is the case in the example above.

However the points above are relatively short. You could also go for two or three points but each with more detail.

The number of points here is not so important. What matters more is being able to explain economics well.

What are some common mistakes to avoid in 10 mark questions for IB Economics paper 1?

Key common mistakes to avoid are:

• Not answering the question.
• Errors in chains of analysis. You need to know your stuff!
• Adding unnecessary elements e.g. extensive evaluation.
• Overwriting. This means less time to write a solid answer to the 15 mark question.

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Model 15-Markers

Unlock your potential with these IB economics model answers, designed to provide a deeper understanding of key topics and real-world examples. 

By studying these model answers, you’ll gain a solid foundation in economic concepts, learn how to structure your essays effectively, and develop critical analysis skills. As you explore the real-world examples provided, you’ll also gain an appreciation for the complexities and nuances of economic policies and their impacts on various societies. 

Our goal is to empower you with the knowledge and confidence needed to succeed in your IB economics journey, ensuring that you’re well-equipped to tackle any question or challenge that comes your way. 

Click on the questions below to see a model essay!

Microeconomics

Using real-world examples, discuss the consequences of a price ceiling on stakeholders

Using real-world examples, evaluate different approaches to managing common access resources

Using real-world examples, evaluate the policies a government might adopt to respond to a market situation in which significant asymmetric information exists

Using real-world examples, evaluate the effects for stakeholders of a government imposing an indirect tax on a particular good

Using real-world examples, evaluate the view that government regulation is the most effective way to deal with negative externalities of consumption

Using real-world examples, evaluate the view that governments should always try to prevent the creation of barriers to entry in a market.

Using real-world examples, evaluate the impact of large firms having significant market power.  

Macroeconomics

Using real-world examples evaluate the claim that according to the Keynesian and monetarist models a decrease in AD will always be deflationary.

Using real-world examples evaluate the view that  economic growth  will always lead to an improvement in living standards

Using real-world examples, evaluate the effectiveness of  monetary policy  to achieve low unemployment

Using real world examples, discuss the effectiveness of demand side policies in achieving a target rate of inflation.

Using real-world examples, evaluate the claim that effective supply side policy is able to improve the tradeoff between inflation and unemployment .

Global Economy

Using real-world examples, discuss the possible implications of a persistent  current account deficit

Using real-world examples, discuss the consequences of a fall in a country’s exchange rate

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How to Nail Your IB Economics Paper 1

By TutorsPlus

Wondering how to nail your IB Economics Paper 1? Being the first stage (out of 3 or 4, depending on your level) of your final exam, Paper 1 can make or break your IB result. Simultaneously stressful and thought-provoking, Paper 1 demands more than solid knowledge of theory.

In this post, we’re going to walk you through the structure of the IB Economics Paper 1, the best method to approach it, as well as some valuable tips to maximize your marks.

The Structure of IB Economics Paper 1

Paper 1 makes up 30% of your final score if you’re at SL and 20% if you’re at HL. There is a lot of work to do to nail your exam, but first of all, you need to understand how IB Economics Paper 1 is designed.

Paper 1 is basically an essay . i.e. the examiners for this part of your IB want to see extended responses. The duration of the assessment is 1 hour and 15 minutes regardless of your Level, plus you will have 5 minutes to read the questions. When it comes to the latter, you will be offered three, out of which you need to choose one to answer. These questions relate to one of the components of the IB Economics syllabus :

• Introduction to Economy.
• Microeconomics.
• Macroeconomics.
• The Global Economy.

Each question in Paper 1 consists of two parts. Part A is normally an ‘explain’ type of question and you will need roughly 30 minutes to complete it.

Part B features an ‘evaluation’ question even though the word ‘evaluation’ isn’t always used. You should spend approximately 45 minutes to answer it. Part A and Part bring a maximum of 10 and 15 marks respectively, and fully completed Paper 1 adds 25 marks to your total score.

Iordanis is an experienced IB teacher and official IBO examiner. He holds Bachelor degrees in Education, Business Administration and Economics. He has extensive experience teaching IBDP Business and Economics at a number of prestigious international schools and is currently Head of Economics at Berlin Cosmopolitan School.

DEED(E) Approach to Paper 1

When answering Paper 1, we recommend sticking to the so-called DEED(E) method, standing for:

• D efine – provide a definition of all the terms your answer contains.
• E xample – give real-life examples or hypothetical situations that illustrate economical terms or processes related to the questions of your Paper 1.
• E xplain – elaborate on your answer, connect it to other relevant keywords or terms, and explain their interconnection.
• D iagram – introduce a diagram that is most appropriate to your answer. It is also critical to explain your diagram (for example, how demand changes based on price/seasonality/competition/shortage of goods/whatever other factor you consider).
• E valuate – applicable only to part B of your Paper, it requests you to provide your own opinion on the matter, detail pros and cons, explain possible consequences of economic actions, etc.

Your answer doesn’t have to follow this particular order to the letter. The explanation part can go before the examples, and you can move definitions of terms to the very end. The most important thing is that you organize your answer in a straightforward manner where everything makes sense and it is easy to track your flow of thoughts.

Tips for IB Economics Paper 1

The DEED(E) approach lends an outline for your answer to Paper 1 . Now that you have the plan to follow, let us give you a few tips on how to tackle each section.

Definitions

Definitions are a foundation to build your entire answer for Paper 1. They show how well you understand the question and economic theory as a whole. You need to know the terms like the back of your hand to score as many marks as possible.

Learning textbook definitions of all the terms is a daunting task. Instead of memorizing, you should try to understand them. For example, it is beneficial to highlight and trace factors that trigger or underline certain economic processes. This will allow you to see a broader picture and the relationship of its elements rather than focusing on the isolated small fragments.

We also recommend using various study materials since they provide different perspectives (as well as explanations and insights) on the same things. Chances are that definitions of a certain author (not necessarily the one you learned in class) resonate with you better.

You can even make a vocabulary list of all the terms (for Demand, Supply, Competitive equilibrium, and so on). Try to find definitions from different authors, put them side by side, and compare. Then, you can come up with your own definition based on the works of others. Terms that you explain in your own words will stick in your mind better and give you a deeper understanding than someone else’s explanations.

Now let’s get back to Paper 1. Start your answer with an explanation of what the question is about using the keyword/term introduced in the question. After that, define the term itself. For instance, in the question “Explain how fiscal policy could be used to increase aggregate demand” you can clearly see two terms – fiscal policy and aggregate demand. Needless to say, you need to define both of them.

It is likely that you will need to mention other terms during the ‘Explanation’ or ‘Example’ parts – make a mental note of these terms but don’t put all the definitions at the top of your essay. Instead, introduce them organically as you elaborate on your answer. Remember – never leave a single term or keyword without a definition since it will reduce your marks. If the body of your work lacks some important definitions, make sure to at least put them at the end. For example, you can say something like this: ‘In conclusion, I would like to define key terms I used throughout my essay…’

Explanation

This part is about providing an answer to the question. Let’s get back to the fiscal policy question. To answer it, you can mention that lowering taxes, increasing unemployment benefits and other social expenses have a beneficial effect on the stimulation of aggregate demand. It is a good idea to list a few fiscal factors that affect aggregate demand and in which way. Make sure that your answer is concise yet clear, comprehensive, and has a good flow.

Your answer will not be complete without an example. Ideally, you should look for real-life examples . This means you must start your research long before the exam. After completing each topic of the syllabus, spend some time finding appropriate examples.

Let’s get back to fiscal policy and aggregate demand – it falls under the “Role of government in microeconomics’. After you study the measurements authorities resort to in order to improve the domestic economic situation, refer to search engines for relevant examples. But don’t just type in ‘How can fiscal policy increase aggregate demand’ because it will just provide textbook examples. Instead, you can use a query such as ‘tax reduction led to an increase in aggregate demand’. But you should be even more specific than this – add a year and country to ensure more relevant results.

We suggest that you use Google News for your research since this tool provides easy filtering by date and topic. Also, it’s best that you search in English since you’ll have access to more sources.

After you find a relevant article, summarize it using the following structure:

• Where – what country/region
• What – which measures did the government implement
• How much – increase/decrease by %, from X to Y
• Result – what it resulted in and by which extent.

This information is fairly difficult to memorize since so many numbers are involved, let alone actions and their consequences. Yet, the answer “In 2015, China cut VAT rate by 1.8% and it led to the increase of aggregate demand by 4.2% in the following year’ looks much better than “China cut VAT and it led to the increase of aggregate demand’.

To help you commit these facts to your memory, try to turn them into visuals (infographics, for example) and post them in a place where you’ll see them every day. By the way, you don’t have to learn all the numbers by heart because it is not a competition in accuracy. It will suffice to say that a reduction by approximately 2% increased demand by over 4%.

The inclusion of real-life examples in your answer is important for top grades. However, don’t get upset if you are not able to provide one. A hypothetical example will do, as long as it is relevant to your situation, demonstrates good judgment, and you are able to use it to build a diagram.

Diagrams are an essential part of economic theory, and it is vital that you know how to draw them. They are also accountable for 2-3 marks out of a total of 25 for IB Economics Paper 1.

Before you include any diagram (Keynesian, Monetarist, etc.) in your answer, it’s worth taking a minute to consider which type fits your needs best. After you chose an appropriate type, draw it using your data. Be very careful with measurement units and the appearance of the diagram. After you are done drawing it, you should fully label it – every axe, curve, intersection, etc. must display relevant and accurate information.

A diagram can’t exist on its own. It must come with an explanation put in words – you need to clarify how a factor on axis X affected an economic process shown on axis Y.

You should keep in mind that Paper 1 consists of two sections – Part A and Part B. Part B is pretty similar to part A, but it features an analytical component.

To nail this section, you can use the DEED approach but slightly modified – DEEDE. The last E stands for Evaluation, and it brings 5 points more (15 points for Part B vs 10 marks for Part A).

Evaluation implies providing a personal perspective on economic actions and processes specified in the question. In other words, it required you to analyze, compare and contrast, justify, predict consequences, highlight advantages and disadvantages, and so on. If you struggle with this part, another acronym, CLASPP , will come in handy:

• C onclusion – explain reasons for the reviewed situation and its effects.
• L ong-Term and Short-Term – how effective are the implemented measurements in the long and short run?
• A ssumptions – what kind of assumptions had to be made to conduct an analysis? Are they realistic and how do they affect the situation?
• S takeholders – how does this situation affect all the involved parties?
• P riority – what are the priorities for those who introduced these economic measurements?
• P ros and Cons – what benefits and shortcomings are associated with this situation?

So, when getting down to the evaluation part, use 2 or three of these concepts to provide your point of view.

You need to convey your evaluations convincingly, especially when time is limited. Our best advice here? Practice! Past papers are of great help to learn what kind of questions you may get. Your practice is to answer them. Remember, you have approximately 15 minutes (and maybe even less if you spend too much time on other parts of the essay) to do the Evaluation. Set a timer and get cracking.

Failed to convey your thought in a given time? Try again using shorter sentences and more concise wording. After a while, you’ll get more confident with your answers and more efficient with your style.

Nail Your IB Economics Paper 1 with TutorsPlus

One more beneficial way to nail your IB Economics Paper 1 is to hire a tutor. Paper 1 is an essay meaning it requires more than knowledge of economic theory. You should also demonstrate independent research (real-life examples), adhesion to a certain structure, as well as a concise yet comprehensive term-rich language. All of this is hard to attain… unless you have someone to guide you.

An IB Economics Tutor can make a difference between a run-of-the-mill paper and a 25-mark-worthy one. Whether you’re lacking solid theoretical knowledge or you’re not sure how to approach your assessment, a tutor is able to help you. You can even have a mock exam to get well-prepared for the real thing.

Are you ready to make a decision to boost your academic success? Then don’t hesitate to book one of our tutors using this online form . You can also contact Tutors Plus via our email – [email protected] – or simply call us 022 731 8148.

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IB Economics EE examples

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