Microeconomics
2.1–2.9
Microeconomics is where IB Economics is won or lost — it's diagram-heavy, vocabulary-precise, and every single question wants three things from you: what shifted, what happened to price and quantity, and who gained or lost. Examiners aren't testing whether you can draw a demand curve; they're testing whether you can read data, place it on the right axis, and narrate the story correctly. Get the terminology exact ("quantity demanded" vs "demand", "price ceiling" vs "price floor") because markschemes are built around these exact phrases.
Overview — The Shape of Microeconomics
How the unit fits together
Everything in this unit sits on one skeleton: demand and supply determine a market equilibrium; elasticities tell you how sensitive that equilibrium is to change; and market failure (externalities, common pool resources, public goods) explains why the free-market equilibrium isn't always the socially efficient one. Government intervention is the toolkit used to push markets toward — or sometimes away from — that efficient outcome, and the final subtopic asks you to step back and question whether consumers and producers actually behave the way the models assume.
- Every diagram question is a mini-essay: label axes fully (Price/Quantity), name every curve, mark both the old and new equilibrium.
- Command terms drive mark allocation more than content knowledge — "explain" wants a mechanism, "evaluate" wants a judgement with a reason.
- Numeric data-response questions (elasticity, tax revenue, surplus/shortage) are just algebra dressed in an economics story — don't let the context intimidate you.
The shape of the chapter
Command terms that decide your mark
| Command term | What it demands | AO | Mark-earning move |
|---|---|---|---|
| Define | State the precise meaning of a term. | AO1 | 1–2 marks for the exact textbook-style definition — a vague paraphrase loses the mark. |
| Distinguish | Give the difference between two closely related terms. | AO2 | Needs a clear point of contrast, not two separate definitions sitting side by side. |
| Using a diagram, explain | Draw a fully labelled diagram AND narrate the causal chain shown on it. | AO2/AO4 | No diagram = capped marks even if the written explanation is perfect; this is the single most common way students lose marks. |
| Calculate | Show working, not just the final number. | AO2 | Method marks are awarded even if the final answer is wrong — always show the substitution step. |
| Examine | Investigate an issue from multiple angles before reaching a view. | AO3 | Needs more analytical depth than "explain" — one-sided answers are capped in the markbands. |
| Evaluate / To what extent | Weigh evidence or arguments and reach a substantiated judgement. | AO3 | Top band requires an explicit judgement in the final sentence, not just a list of pros and cons. |
Key point
Overview