Through studying IB Economics, your students will develop a solid understanding of economic theory and how it manifests in the real world. They will become internationally-minded citizens and develop core problem-solving skills.
In this blog, we’re sharing two worksheets from our Economics for the IB Diploma coursebook, by author and senior IB examiner, Ellie Tragakes. Encourage your students to review their understanding of the nine key concepts of the course, such as sustainability and equity, and support them to draw an externalities diagram without memorising.
The foundations of economics
This exercise will allow students to review their understanding of the nine key concepts of the course.
Click to download Worksheet 1.
The correct answers for the worksheet are as follows:
- Scarcity
- Choices
- Scarcity
- Sustainability
- Scarcity
- Efficiency
- Equity
- Economic well-being
- Intervention
- Equity
- Economic well-being
- Intervention
- Interdependence
- Change
Here are some further definitions to share with your students:
Change – Change is important in economics in the study of both economic theory as well as in real-world events.
Choice – Economics is a study of choices, or selecting among alternatives, due to the scarcity of resources.
Economic well-being – refers to levels of prosperity, economic satisfaction and standards of living among the members of a society.
Efficiency – involves making the best possible use of scarce resources to avoid waste; may refer to producing at the lowest possible cost, or producing what consumers mostly want.
Equity – is the condition of being fair or just; should be contrasted with the term ‘equality’. Often used in connection with income distribution, in which case it is usually interpreted to mean income equality (though this is only one possible interpretation of equity).
Interdependence – refers to the idea that economic decision-makers interact with and depend on each other; arises from the fact that no one is self-sufficient.
Intervention – typically refers to government intervention, meaning that the government becomes involved with the workings of markets.
Scarcity – it is the condition in which available resources (land, labour, capital, entrepreneurship) are limited; they are not enough to produce everything that human beings need and want.
Sustainability – refers to maintaining the ability of the environment and the economy to continue to produce and satisfy needs and wants into the future for future generations; depends crucially on the preservation of the environment over time.
How to draw an externality diagram without memorising
Students often have difficulty learning how to draw the externality diagrams and labelling the curves correctly. Download the worksheet below which displays a set of rules to help your students draw externality diagrams without memorising.
Click to download Worksheet 2.
Here are some useful points to remember about externalities:
- All negative externalities (of production and consumption) create external costs. When there are external costs, MSC > MSB at the point of production by the market.
- All positive externalities (of production and consumption) create external benefits. When there are external benefits MSB > MSC at the point of production by the market.
- All production externalities (positive and negative) create a divergence between private and social costs (MPC and MSC).
- All consumption externalities (positive and negative) create a divergence between private and social benefits (MPB and MSB).
To find out more about Economics for the IB Diploma, please visit our website.
