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How Do Economists Approach the World? · Paper 1 — Free Economics HL Practice Questions

What this topic covers

Every IB Economics paper rests on the ideas in this unit, so examiners treat it as fair game inside almost any data-response or essay question, not just as a start-of-course warm-up. Two threads run through it: the theoretical toolkit (scarcity, opportunity cost, the PPC, positive vs normative reasoning) that frames how economists think, and the evidence toolkit (types of data, reliability, the Gini coefficient) that frames how they gather proof for real debates like Kenyan poverty measurement or Vietnam's GDP figures. Trade protection sits here as the worked case of government intervention distorting the price mechanism — get fluent labelling those diagrams with actual numbers, because that is exactly where marks are won or lost.

Read the full Introduction to Economics lesson notes →

1FoundationSAQ-SThe role of data and evidence in economics4 marksPaper 1~6 min

A government is considering a policy to reduce smoking. The Minister of Health has access to two data sources: - Source 1: A survey of 500 smokers reporting how many cigarettes they smoke per day - Source 2: A National Statistics Office report showing the total number of cigarettes sold nationally last year

(a)

Define the terms quantitative data and qualitative data, and state which type each source represents. [2 marks]

(b)

Explain why Source 2 is more reliable than Source 1 for estimating the total number of cigarettes smoked in the country, and identify one limitation of Source 2 for this purpose. [2 marks]

Solutions

2FoundationSAQ-SThe role of data and evidence in economics4 marksPaper 1~6 min

An economist is studying the impact of a drought on agricultural output in India. She collects two datasets: annual wheat harvest tonnage in India for each year from 2019 to 2023, and interviews with 20 farmers from different regions describing how the 2023 drought affected their planting decisions.

(a)

Define the term time-series data as used in economics. [1 mark]

(b)

Define the term cross-sectional data as used in economics. [1 mark]

(c)

Identify which of the two datasets is best classified as time-series data and which is best classified as cross-sectional data. State one limitation of using only the time-series dataset to understand the full impact of the drought. [2 marks]

Solutions

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