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criteria)</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/36082/annotated-extended-essay-sample-1" title="Annotated extended essay sample 1">Annotated extended essay sample 1</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/36110/annotated-extended-essay-sample-1-grading-criteria" title="Annotated extended essay sample 1 (grading criteria)">Annotated extended essay sample 1 (grading criteria)</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20792/annotated-extended-essay-sample-2" title="Annotated extended essay sample 2">Annotated extended essay sample 2</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i 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4px"><i class="expander fa fa-caret-right fa-rotate-90"></i><a class="" href="https://www.student.thinkib.net/economics/page/32112/textbook" title="Textbook">Textbook</a></li><ul class="level-1 expanded"><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/33061/contents-page" title="Contents page">Contents page</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/37990/textbook-approach-to-the-new-ib-economics-examination-specificat" title="Textbook approach to the new IB Economics examination specification">Textbook approach to the new IB Economics examination specification</a></li><li class="ancestor parent" style="padding-left: 14px"><i class="expander fa fa-caret-right fa-rotate-90"></i><a class="" 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href="https://www.student.thinkib.net/economics/page/33063/chapter-2-microeconomics" title="Chapter 2: Microeconomics">Chapter 2: Microeconomics</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32533/unit-21-demand-theory" title="Unit 2.1: Demand theory">Unit 2.1: Demand theory</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32555/unit-22-supply-theory" title="Unit 2.2: Supply theory">Unit 2.2: Supply theory</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32567/unit-23-competitive-market-equilibrium" title="Unit 2.3: Competitive market equilibrium">Unit 2.3: Competitive market equilibrium</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32575/unit-241-behavioural-economics-hl" title="Unit 2.4(1): Behavioural economics (HL)">Unit 2.4(1): Behavioural economics (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32798/unit-242-business-objectives-hl" title="Unit 2.4(2): Business objectives (HL)">Unit 2.4(2): Business objectives (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32663/unit-251-price-elasticity-of-demand-ped" title="Unit 2.5(1): Price elasticity of demand (PED)">Unit 2.5(1): Price elasticity of demand (PED)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32788/unit-252-income-elasticity-of-demand-yed-" title="Unit 2.5(2): Income elasticity of demand (YED) ">Unit 2.5(2): Income elasticity of demand (YED) </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32789/unit-26-price-elasticity-of-supply-pes-" title="Unit 2.6: Price elasticity of supply (PES) ">Unit 2.6: Price elasticity of supply (PES) </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/33388/unit-271-governments-in-markets-tax-and-subsidy-" title="Unit 2.7(1): Governments in markets - tax and subsidy ">Unit 2.7(1): Governments in markets - tax and subsidy </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/33424/unit-272-governments-in-markets-price-controls" title="Unit 2.7(2): Governments in markets - price controls">Unit 2.7(2): Governments in markets - price controls</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/33665/unit-281-market-failure-externalities" title="Unit 2.8(1): Market failure – externalities">Unit 2.8(1): Market failure – externalities</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/33808/unit-282-market-failure-merit-goods-and-demerit-goods-" title="Unit 2.8(2): Market failure - merit goods and demerit goods ">Unit 2.8(2): Market failure - merit goods and demerit goods </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34054/unit-283-government-intervention-to-manage-externalities-merit-a" title="Unit 2.8(3): Government intervention to manage externalities, merit and demerit goods ">Unit 2.8(3): Government intervention to manage externalities, merit and demerit goods </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34082/unit-284-common-access-pool-resources" title="Unit 2.8(4): Common access (pool) resources">Unit 2.8(4): Common access (pool) resources</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34087/unit-29-public-goods" title="Unit 2.9: Public goods">Unit 2.9: Public goods</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34247/unit-210-asymmetric-information-hl" title="Unit 2.10: Asymmetric information (HL)">Unit 2.10: Asymmetric information (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35118/unit-2111-market-power-theory-of-production-and-costs-hl" title="Unit 2.11(1) Market power - Theory of production and costs (HL)">Unit 2.11(1) Market power - Theory of production and costs (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35125/unit-2112-market-power-perfect-competitionhl" title="Unit 2.11(2) Market power - Perfect competition(HL)">Unit 2.11(2) Market power - Perfect competition(HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35147/unit-2113-market-power-monopolyhl" title="Unit 2.11(3) Market power - Monopoly(HL)">Unit 2.11(3) Market power - Monopoly(HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35151/unit-2114-market-power-monopolistic-competitionhl" title="Unit 2.11(4) Market power - Monopolistic competition(HL)">Unit 2.11(4) Market power - Monopolistic competition(HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35153/unit-2115-market-power-oligopolyhl" title="Unit 2.11(5) Market power - Oligopoly(HL)">Unit 2.11(5) Market power - Oligopoly(HL)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41603/economics-real-world-examples-and-extension-material-" title="Economics real world examples and extension material ">Economics real world examples and extension material </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/43378/opportunity-cost-and-production-possibility-curves" title="Opportunity cost and production possibility curves">Opportunity cost and production possibility curves</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42559/demand-theory" title="Demand theory">Demand theory</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41886/the-price-mechanism" title="The price mechanism">The price mechanism</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/43188/market-demand-and-supply" title="Market demand and supply">Market demand and supply</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41705/demerit-goods" title="Demerit goods">Demerit goods</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42275/market-failure-and-climate-change" title="Market failure and climate change">Market failure and climate change</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42925/market-power" title="Market power">Market power</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42099/applying-game-theory" title="Applying game theory">Applying game theory</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34407/chapter-3-macroeconomics" title="Chapter 3: Macroeconomics">Chapter 3: Macroeconomics</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34355/unit-311-measuring-the-level-of-economic-activity" title="Unit 3.1(1): Measuring the level of economic activity">Unit 3.1(1): Measuring the level of economic activity</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34432/unit-312-measuring-economic-development" title="Unit 3.1(2): Measuring Economic Development">Unit 3.1(2): Measuring Economic Development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34485/unit-321-variations-in-economic-activity-aggregate-demand-ad-" title="Unit 3.2(1): Variations in economic activity - aggregate demand (AD) ">Unit 3.2(1): Variations in economic activity - aggregate demand (AD) </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34487/unit-322-variations-in-economic-activity-aggregate-supplyas" title="Unit 3.2(2): Variations in economic activity - aggregate supply(AS)">Unit 3.2(2): Variations in economic activity - aggregate supply(AS)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34758/unit-331-macroeconomic-objectives-economic-growth" title="Unit 3.3(1) Macroeconomic objectives: economic growth">Unit 3.3(1) Macroeconomic objectives: economic growth</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34771/unit-332-macroeconomic-objectives-unemployment-" title="Unit 3.3(2) Macroeconomic objectives: unemployment ">Unit 3.3(2) Macroeconomic objectives: unemployment </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34778/unit-333-macroeconomic-objectives-inflation-and-deflation-" title="Unit 3.3(3) Macroeconomic objectives: inflation and deflation ">Unit 3.3(3) Macroeconomic objectives: inflation and deflation </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34925/unit-341-economics-of-inequality-and-poverty" title="Unit 3.4(1) Economics of inequality and poverty">Unit 3.4(1) Economics of inequality and poverty</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34946/unit-342-policies-to-improve-equality-equity-and-poverty" title="Unit 3.4(2) Policies to improve equality, equity and poverty">Unit 3.4(2) Policies to improve equality, equity and poverty</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34993/unit-35-government-management-of-the-economy-monetary-policy" title="Unit 3.5 Government management of the economy – monetary policy">Unit 3.5 Government management of the economy – monetary policy</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/34962/unit-36-government-management-of-the-economy-fiscal-policy" title="Unit 3.6 Government management of the economy – fiscal policy">Unit 3.6 Government management of the economy – fiscal policy</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35017/unit-371-market-based-supply-side-policies-" title="Unit 3.7(1) Market based supply-side policies ">Unit 3.7(1) Market based supply-side policies </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35018/unit-372-interventionist-supply-side-policies-" title="Unit 3.7(2) Interventionist supply-side policies ">Unit 3.7(2) Interventionist supply-side policies </a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/45803/economics-real-world-examples-and-extension-material-" title="Economics real world examples and extension material ">Economics real world examples and extension material </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42639/measuring-economic-well-being" title="Measuring economic well-being">Measuring economic well-being</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/43044/inflation" title="Inflation">Inflation</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42350/inequality" title="Inequality">Inequality</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41639/inequity" title="Inequity">Inequity</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35414/chapter-4-the-global-economy" title="Chapter 4: The Global Economy">Chapter 4: The Global Economy</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35346/unit-41-benefits-of-international-trade" title="Unit 4.1 Benefits of international trade">Unit 4.1 Benefits of international trade</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35348/unit-4243-trade-protectionism" title="Unit 4.2/4.3 Trade protectionism">Unit 4.2/4.3 Trade protectionism</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35407/unit-44-economic-integration-" title="Unit 4.4 Economic integration ">Unit 4.4 Economic integration </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35409/unit-45-exchange-rates" title="Unit 4.5 Exchange rates">Unit 4.5 Exchange rates</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35413/unit-46-balance-of-payments-" title="Unit 4.6 Balance of payments ">Unit 4.6 Balance of payments </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35675/unit-47-sustainable-development" title="Unit 4.7 Sustainable development">Unit 4.7 Sustainable development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35685/unit-48-measuring-development-" title="Unit 4.8 Measuring development ">Unit 4.8 Measuring development </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35687/unit-49-barriers-to-economic-development" title="Unit 4.9 Barriers to economic development">Unit 4.9 Barriers to economic development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/35702/unit-410-economic-growth-and-economic-development-strategies" title="Unit 4.10: Economic growth and economic development strategies">Unit 4.10: Economic growth and economic development strategies</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/45804/economics-real-world-examples-and-extension-material-" title="Economics real world examples and extension material ">Economics real world examples and extension material </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41927/foreign-currency" title="Foreign currency">Foreign currency</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/43532/exchange-rates" title="Exchange rates">Exchange rates</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/43804/balance-of-payments" title="Balance of payments">Balance of payments</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41796/economic-development" title="Economic development">Economic development</a></li></ul></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20132/units-1-2-microeconomics" title="Units 1-2: Microeconomics">Units 1-2: Microeconomics</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Unit 1: Introduction to economics">Unit 1: Introduction to economics</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20091/introductory-activity" title="Introductory activity">Introductory activity</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20093/unit-11-scarcity-choice-and-opportunity-cost" title="Unit 1.1: Scarcity, choice and opportunity cost">Unit 1.1: Scarcity, choice and opportunity cost</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21647/factors-of-production" title="Factors of production">Factors of production</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20114/economic-systems" title="Economic systems">Economic systems</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20134/public-and-private-sectors" title="Public and private sectors">Public and private sectors</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/28055/unit-12-economics-as-a-social-science" title="Unit 1.2: Economics as a social science">Unit 1.2: Economics as a social science</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29921/circular-flow-of-national-income" title="Circular flow of national income">Circular flow of national income</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29829/unit-1-review-terms" title="Unit 1: Review terms">Unit 1: Review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/41600/introduction-to-economics-crossword" title="Introduction to economics crossword">Introduction to economics crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/4331/unit-1-multiple-choice-quiz" title="Unit 1: Multiple choice quiz">Unit 1: Multiple choice quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20177/unit-21-23-competitive-markets-demand-and-supply" title="Unit 2.1-2.3: Competitive markets - demand and supply">Unit 2.1-2.3: Competitive markets - demand and supply</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/28517/unit-21-demand" title="Unit 2.1: Demand">Unit 2.1: Demand</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/22349/determinants-of-demand" title="Determinants of demand">Determinants of demand</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29949/unit-22-supply-" title="Unit 2.2: Supply ">Unit 2.2: Supply </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20184/changes-to-supply-and-demand-" title="Changes to supply and demand ">Changes to supply and demand </a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21992/practise-exercises" title="Practise exercises">Practise exercises</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/26112/gold-exchange-game-demand-and-supply" title="Gold exchange game: Demand and supply">Gold exchange game: Demand and supply</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20194/unit-23-competitive-market-equilibrium" title="Unit 2.3: Competitive market equilibrium">Unit 2.3: Competitive market equilibrium</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20144/producer-and-consumer-surplus" title="Producer and consumer surplus">Producer and consumer surplus</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/22351/veblen-goods-and-super-luxury-goods" title="Veblen goods and super luxury goods">Veblen goods and super luxury goods</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/25677/are-cryptocurrencies-the-new-tulipmania" title="Are Cryptocurrencies the new Tulipmania?">Are Cryptocurrencies the new Tulipmania?</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20472/unit-21-23-multiple-choice-quiz" title="Unit 2.1-2.3: Multiple choice quiz">Unit 2.1-2.3: Multiple choice quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20113/unit-24-consumer-and-producer-behaviour-hl-only" title="Unit 2.4: Consumer and producer behaviour (HL only)">Unit 2.4: Consumer and producer behaviour (HL only)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/36073/behavioural-economics-consumer-biases-nudge-theory-hl-only" title="Behavioural economics: Consumer biases / nudge theory (HL only)">Behavioural economics: Consumer biases / nudge theory (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20378/business-objectives-hl-only" title="Business objectives (HL only)">Business objectives (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/28741/unit-21-24-review-terms-" title="Unit 2.1-2.4: Review terms ">Unit 2.1-2.4: Review terms </a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20195/unit-25-26-elasticity" title="Unit 2.5-2.6: Elasticity">Unit 2.5-2.6: Elasticity</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/28713/unit-25-price-elasticity-of-demand" title="Unit 2.5: Price elasticity of demand">Unit 2.5: Price elasticity of demand</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21545/determinants-of-price-elasticity-" title="Determinants of price elasticity ">Determinants of price elasticity </a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21532/ped-elasticity-and-sales-revenue" title="PED elasticity and sales revenue?">PED elasticity and sales revenue?</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21259/unit-25-income-elasticity-of-demand-yed" title="Unit 2.5: Income elasticity of demand (YED)">Unit 2.5: Income elasticity of demand (YED)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21200/unit-26-price-elasticity-of-supply" title="Unit 2.6: Price elasticity of supply">Unit 2.6: Price elasticity of supply</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20207/perfectly-elastic-inelastic-supply-curves" title="Perfectly elastic / inelastic supply curves">Perfectly elastic / inelastic supply curves</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20230/a-mathematical-note-about-elasticity-" title="A mathematical note about elasticity ">A mathematical note about elasticity </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/39037/demand-and-supply-crossword" title="Demand and supply crossword">Demand and supply crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29021/unit-25-26-review-terms" title="Unit 2.5-2.6: Review terms">Unit 2.5-2.6: Review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20474/unit-25-26-multiple-choice-quiz-" title="Unit 2.5-2.6: Multiple choice quiz ">Unit 2.5-2.6: Multiple choice quiz </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/44474/unit-21-25-competitive-markets-quiz" title="Unit 2.1- 2.5: Competitive markets quiz">Unit 2.1- 2.5: Competitive markets quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20243/unit-27-the-role-of-government-in-microeconomics-" title="Unit 2.7: The role of government in microeconomics ">Unit 2.7: The role of government in microeconomics </a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/26590/indirect-taxation" title="Indirect taxation">Indirect taxation</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20246/ped-and-the-burden-of-tax-hl-only-" title="PED and the burden of tax (HL only) ">PED and the burden of tax (HL only) </a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20277/government-subsidies-" title="Government subsidies ">Government subsidies </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29117/unit-27-indirect-tax-and-subsidy-review-terms" title="Unit 2.7: Indirect tax and subsidy review terms">Unit 2.7: Indirect tax and subsidy review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20287/price-controls-maximum-price-" title="Price controls − maximum price ">Price controls − maximum price </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20288/minimum-price-" title="Minimum price ">Minimum price </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21540/minimum-wage-" title="Minimum wage ">Minimum wage </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/38849/labour-market-crossword" title="Labour market crossword">Labour market crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29260/unit-27-price-controls-review-terms" title="Unit 2.7: Price controls review terms">Unit 2.7: Price controls review terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20303/unit-28-210-market-failure-" title="Unit 2.8-2.10: Market failure ">Unit 2.8-2.10: Market failure </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21543/unit-28-merit-goods-" title="Unit 2.8: Merit goods ">Unit 2.8: Merit goods </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/23123/unit-28-demerit-goods-negative-externalities" title="Unit 2.8: Demerit goods / negative externalities">Unit 2.8: Demerit goods / negative externalities</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/38850/market-failure-crossword" title="Market failure crossword">Market failure crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29262/unit-29-economics-of-the-environment-and-public-goods-" title="Unit 2.9: Economics of the environment and public goods ">Unit 2.9: Economics of the environment and public goods </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20332/unit-210-asymmetric-information-hl-only" title="Unit 2.10: Asymmetric information (HL only)">Unit 2.10: Asymmetric information (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29828/unit-28-210-market-failure-review-sheet" title="Unit 2.8-2.10: Market failure review sheet">Unit 2.8-2.10: Market failure review sheet</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29827/unit-28-210-market-failure-review-terms" title="Unit 2.8-2.10: Market failure review terms">Unit 2.8-2.10: Market failure review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20479/unit-27-210-multiple-choice-quiz-" title="Unit 2.7-2.10: Multiple choice quiz ">Unit 2.7-2.10: Multiple choice quiz </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/44501/unit-27-210-government-failure-revision-quiz" title="Unit 2.7-2.10 Government failure revision quiz">Unit 2.7-2.10 Government failure revision quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20330/unit-211-market-power-hl-only" title="Unit 2.11: Market power (HL only)">Unit 2.11: Market power (HL only)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29835/assessment-map" title="Assessment map">Assessment map</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21528/production-hl-only" title="Production (HL only)">Production (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29978/revenue-theory-hl-only" title="Revenue theory (HL only)">Revenue theory (HL only)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20357/costs-of-production-hl-only" title="Costs of production (HL only)">Costs of production (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21286/economies-and-diseconomies-of-scale-hl-only" title="Economies and diseconomies of scale (HL only)">Economies and diseconomies of scale (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/22494/long-run-average-cost-curves-hl-only" title="Long run average cost curves (HL only)">Long run average cost curves (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29838/breakeven-hl-only" title="Breakeven (HL only)">Breakeven (HL only)</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20340/economic-profit-hl-only" title="Economic profit (HL only)">Economic profit (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/39082/market-power-crossword" title="Market power crossword">Market power crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/22495/revision-exercise-on-cost-and-revenue-hl-only" title="Revision exercise on cost and revenue (HL only)">Revision exercise on cost and revenue (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29845/unit-211-costs-revenue-and-profit-review-sheet-hl-only" title="Unit 2.11: Costs, revenue and profit review sheet (HL only)">Unit 2.11: Costs, revenue and profit review sheet (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/44484/unit-211-multiple-choice-quiz-sl-units" title="Unit 2.11: Multiple choice quiz (SL units)">Unit 2.11: Multiple choice quiz (SL units)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29846/market-structures-hl-only" title="Market structures (HL only)">Market structures (HL only)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29981/perfect-competition-hl-only" title="Perfect competition (HL only)">Perfect competition (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/24486/profit-in-perfect-competition-hl-only" title="Profit in perfect competition (HL only)">Profit in perfect competition (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21302/efficiency-in-perfect-competition-hl-only" title="Efficiency in perfect competition (HL only)">Efficiency in perfect competition (HL only)</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20430/monopoly-hl-only" title="Monopoly (HL only)">Monopoly (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/24529/profit-and-revenue-maximisation-in-monopoly-hl-only" title="Profit and revenue maximisation in monopoly (HL only)">Profit and revenue maximisation in monopoly (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21306/a-comparison-of-monopoly-and-perfect-competition-hl-only" title="A comparison of monopoly and perfect competition? (HL only)">A comparison of monopoly and perfect competition? (HL only)</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20435/monopolistic-competition-hl-only" title="Monopolistic competition (HL only)">Monopolistic competition (HL only)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20436/oligopoly-hl-only" title="Oligopoly (HL only)">Oligopoly (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/22310/game-theory-hl-only" title="Game theory (HL only)">Game theory (HL only)</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29918/unit-211-market-structures-review-sheet-hl-only" title="Unit 2.11: Market structures review sheet (HL only)">Unit 2.11: Market structures review sheet (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32337/unit-211-diagram-revision-" title="Unit 2.11: Diagram revision ">Unit 2.11: Diagram revision </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20480/unit-211-multiple-choice-quiz-hl-only" title="Unit 2.11: Multiple choice quiz (HL only)">Unit 2.11: Multiple choice quiz (HL only)</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32425/unit-212-the-markets-inability-to-achieve-equity-hl-only" title="Unit 2.12: The market’s inability to achieve equity (HL only)">Unit 2.12: The market’s inability to achieve equity (HL only)</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21842/unit-3-macroeconomics-" title="Unit 3: Macroeconomics ">Unit 3: Macroeconomics </a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/3942/unit-31-measuring-economic-activity-and-illustrating-its-variati" title="Unit 3.1: Measuring economic activity and illustrating its variations">Unit 3.1: Measuring economic activity and illustrating its variations</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20558/calculating-national-income" title="Calculating national income">Calculating national income</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21297/gdp-gni-as-a-measure-of-living-standards" title="GDP / GNI as a measure of living standards">GDP / GNI as a measure of living standards</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20567/national-income-statistics" title="National income statistics">National income statistics</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21580/the-business-cycle" title="The business cycle">The business cycle</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29931/unit-31-economic-activity-review-sheet" title="Unit 3.1: Economic activity review sheet">Unit 3.1: Economic activity review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20592/unit-32-variations-in-economic-activityaggregate-demand-and-aggr" title="Unit 3.2: Variations in economic activity—aggregate demand and aggregate supply">Unit 3.2: Variations in economic activity—aggregate demand and aggregate supply</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/29933/aggregate-demand-and-supply" title="Aggregate demand and supply">Aggregate demand and supply</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21582/components-of-aggregate-demand" title="Components of aggregate demand">Components of aggregate demand</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20634/equilibrium-in-macroeconomics-neo-classical-perspective" title="Equilibrium in macroeconomics (neo-classical perspective)">Equilibrium in macroeconomics (neo-classical perspective)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20439/equilibrium-in-macroeconomics-keynesian-perspective" title="Equilibrium in macroeconomics (keynesian perspective)">Equilibrium in macroeconomics (keynesian perspective)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21349/john-maynard-keynes" title="John Maynard Keynes">John Maynard Keynes</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20650/keynesian-v-free-market-debate-" title="Keynesian v free market debate ">Keynesian v free market debate </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21342/changes-in-the-long-run-aggregate-supply" title="Changes in the long run aggregate supply">Changes in the long run aggregate supply</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30055/unit-32-aggregate-demand-and-supply-review-sheet" title="Unit 3.2: Aggregate demand and supply review sheet">Unit 3.2: Aggregate demand and supply review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20610/unit-35-and-36-demand-management-fiscal-and-monetary-policy" title="Unit 3.5 and 3.6: Demand management - fiscal and monetary policy">Unit 3.5 and 3.6: Demand management - fiscal and monetary policy</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30058/government-budget" title="Government budget">Government budget</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21585/fiscal-policy-" title="Fiscal policy ">Fiscal policy </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21343/multiplier-hl-only" title="Multiplier (HL only)">Multiplier (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21795/monetary-policy-" title="Monetary policy ">Monetary policy </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30071/independent-central-banks" title="Independent central banks">Independent central banks</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30083/unit-35-and-36-review-sheet" title="Unit 3.5 and 3.6 review sheet">Unit 3.5 and 3.6 review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20615/unit-37-supply-side-policies" title="Unit 3.7: Supply side policies">Unit 3.7: Supply side policies</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20651/the-role-of-supply-side-policies" title="The role of supply side policies">The role of supply side policies</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20622/market-based-and-interventionist-supply-side-policies-" title="Market based and interventionist supply side policies ">Market based and interventionist supply side policies </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/39129/aggregate-demand-and-supply-crossword" title="Aggregate demand and supply crossword">Aggregate demand and supply crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30086/unit-37-review-sheet" title="Unit 3.7: Review sheet">Unit 3.7: Review sheet</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20755/unit-31-32-and-35-37-multiple-choice-quiz-" title="Unit 3.1-3.2 and 3.5-3.7: Multiple choice quiz ">Unit 3.1-3.2 and 3.5-3.7: Multiple choice quiz </a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/44522/unit-31-32-and-35-37-revision-quiz" title="Unit 3.1-3.2 and 3.5-3.7: Revision quiz">Unit 3.1-3.2 and 3.5-3.7: Revision quiz</a></li><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20686/unit-33-macroeconomic-objectives" title="Unit 3.3: Macroeconomic objectives">Unit 3.3: Macroeconomic objectives</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30118/unemployment" title="Unemployment">Unemployment</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21351/types-of-unemployment" title="Types of unemployment?">Types of unemployment?</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21593/equilibrium-unemployment-" title="Equilibrium unemployment ">Equilibrium unemployment </a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21594/disequilibrium-unemployment" title="Disequilibrium unemployment">Disequilibrium unemployment</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30458/unemployment-review-sheet" title="Unemployment review sheet">Unemployment review sheet</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20713/inflation-" title="Inflation ">Inflation </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20712/measuring-inflation-hl-only" title="Measuring inflation (HL only)">Measuring inflation (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20685/costs-of-inflation-and-deflation" title="Costs of inflation and deflation">Costs of inflation and deflation</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30465/inflation-review-sheet" title="Inflation review sheet">Inflation review sheet</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20716/unemployment-v-inflation-trade-off-hl-only" title="Unemployment v inflation trade off (HL only)">Unemployment v inflation trade off (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/39133/macroeconomic-objectives-crossword" title="Macroeconomic objectives crossword">Macroeconomic objectives crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/44511/unit-33-macroeconomic-indicators-revision-quiz" title="Unit 3.3: Macroeconomic indicators revision quiz">Unit 3.3: Macroeconomic indicators revision quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20741/unit-34-economics-of-inequality-and-poverty" title="Unit 3.4: Economics of inequality and poverty">Unit 3.4: Economics of inequality and poverty</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32398/inequality" title="Inequality">Inequality</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21356/the-role-of-spending-and-taxation-on-inequality-" title="The role of spending and taxation on inequality ">The role of spending and taxation on inequality </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21313/consequences-of-economic-growth" title="Consequences of economic growth">Consequences of economic growth</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30257/economic-growth-and-inequality-review-sheet" title="Economic growth and inequality review sheet">Economic growth and inequality review sheet</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20756/unit-33-34-multiple-choice-" title="Unit 3.3-3.4: Multiple choice ">Unit 3.3-3.4: Multiple choice </a></li></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21844/unit-4-global-economy" title="Unit 4: Global economy">Unit 4: Global economy</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21367/unit-41-benefits-of-international-trade" title="Unit 4.1: Benefits of international trade">Unit 4.1: Benefits of international trade</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30529/benefits-of-international-trade" title="Benefits of international trade">Benefits of international trade</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20823/absolute-and-comparative-advantage-hl-only" title="Absolute and comparative advantage (HL only)">Absolute and comparative advantage (HL only)</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20845/unit-42-43-trade-protection" title="Unit 4.2-4.3: Trade protection">Unit 4.2-4.3: Trade protection</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32419/barriers-to-trade-calculations-are-hl-only" title="Barriers to trade (calculations are HL only)">Barriers to trade (calculations are HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21610/case-study-on-tata-steel" title="Case study on Tata Steel">Case study on Tata Steel</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/23455/the-defence-industry" title="The Defence industry">The Defence industry</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30610/unit-41-43-review-sheet" title="Unit 4.1-4.3: Review sheet">Unit 4.1-4.3: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20894/unit-44-economic-integration-" title="Unit 4.4: Economic integration ">Unit 4.4: Economic integration </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30634/economic-integration-some-hl-tasks" title="Economic integration (some HL tasks)">Economic integration (some HL tasks)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20840/world-trade-organisation-wto" title="World trade organisation (WTO)">World trade organisation (WTO)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30635/unit-44-review-sheet" title="Unit 4.4: Review sheet">Unit 4.4: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20853/unit-45-exchange-rates" title="Unit 4.5: Exchange rates">Unit 4.5: Exchange rates</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30611/floating-exchange-rates" title="Floating exchange rates">Floating exchange rates</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/31824/fixed-managed-exchange-rate-systems-some-hl-tasks" title="Fixed / managed exchange rate systems (some HL tasks)">Fixed / managed exchange rate systems (some HL tasks)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21624/the-market-for-foreign-exchange" title="The market for foreign exchange">The market for foreign exchange</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30614/unit-45-review-sheet" title="Unit 4.5: Review sheet">Unit 4.5: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20859/unit-46-balance-of-payments" title="Unit 4.6: Balance of payments">Unit 4.6: Balance of payments</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30624/balance-of-payments-" title="Balance of payments ">Balance of payments </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21386/current-account-hl-only" title="Current account (HL only)">Current account (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20872/the-marshall-lerner-condition-j-curve-hl-only" title="The Marshall-Lerner condition / J curve (HL only)">The Marshall-Lerner condition / J curve (HL only)</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20899/units-41-46-multiple-choice-quiz-" title="Units 4.1-4.6: Multiple choice quiz ">Units 4.1-4.6: Multiple choice quiz </a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/42989/unit-41-46-multiple-choice-quiz-ii" title="Unit 4.1-4.6: Multiple choice quiz II">Unit 4.1-4.6: Multiple choice quiz II</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/39438/unit-41-46-international-trade-crossword" title="Unit 4.1-4.6: International trade crossword">Unit 4.1-4.6: International trade crossword</a></li><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32423/unit-47-sustainable-development-" title="Unit 4.7: Sustainable development ">Unit 4.7: Sustainable development </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/26092/water-scarcity-activity" title="Water scarcity activity">Water scarcity activity</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32426/sustainable-development" title="Sustainable development">Sustainable development</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20928/unit-48-measuring-development-" title="Unit 4.8: Measuring development ">Unit 4.8: Measuring development </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30686/measuring-development" title="Measuring development">Measuring development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21627/economic-development-" title="Economic development ">Economic development </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30679/unit-47-48-review-sheet" title="Unit 4.7-4.8: Review sheet">Unit 4.7-4.8: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Unit 4.9: Barriers to development">Unit 4.9: Barriers to development</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30727/barriers-to-development-in-international-trade" title="Barriers to development in International trade">Barriers to development in International trade</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32430/unit-410-economic-growth-andor-economic-development-strategies" title="Unit 4.10: Economic growth and/or economic development strategies">Unit 4.10: Economic growth and/or economic development strategies</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30687/the-role-of-domestic-factors" title="The role of domestic factors">The role of domestic factors</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30688/the-role-of-international-trade-and-development" title="The role of international trade and development">The role of international trade and development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30689/the-role-of-foreign-direct-investment-fdi" title="The role of foreign direct investment (FDI)">The role of foreign direct investment (FDI)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/25240/the-role-of-foreign-aid-" title="The role of foreign aid ">The role of foreign aid </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30819/multilateral-development-assistance" title="Multilateral development assistance">Multilateral development assistance</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21632/the-role-of-international-debt" title="The role of international debt">The role of international debt</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/25242/the-balance-between-markets-and-intervention" title="The balance between markets and intervention">The balance between markets and intervention</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/30926/unit-49-410-review-sheet" title="Unit 4.9 - 4.10: Review sheet">Unit 4.9 - 4.10: Review sheet</a></li></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21380/assessment" title="Assessment">Assessment</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Internal assessment ">Internal assessment </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/20608/how-to-write-your-ia-student-handout" title="How to write your IA? (student handout)">How to write your IA? (student handout)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/21428/how-to-interpret-the-assessment-criteria" title="How to interpret the assessment criteria?">How to interpret the assessment criteria?</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Grading practise ">Grading practise </a></li><ul class="level-3 "><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Sample 3a">Sample 3a</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32083/sample-3b" title="Sample 3b">Sample 3b</a></li></ul></ul></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/32022/assessment-markbands" title="Assessment markbands">Assessment markbands</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/4332/exam-style-questions" title="Exam style questions">Exam style questions</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Paper 1 style examination questions">Paper 1 style examination questions</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/40100/unit-211-212-questions" title="Unit 2.11-2.12 questions">Unit 2.11-2.12 questions</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="https://www.student.thinkib.net/economics/page/45102/paper-1-guidance-on-essay-writing" title="Paper 1 guidance on essay writing">Paper 1 guidance on essay writing</a></li></ul></ul></nav> </div> </div> </div> </div><div style="margin-top: 20px;"><style type="text/css">
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<div id="main-column" class="span9"> <article id="unit-11-introduction-to-economics" style="margin-top: 16px;">
<h1 class="section-title">Unit 1.1: Introduction to Economics</h1>
<ul class="breadcrumb"><li><a title="Home" href="https://www.student.thinkib.net/economics"><i class="fa fa-home"></i></a><span class="divider">/</span></li><li><span class="gray">Textbook</span><span class="divider">/</span></li><li><span class="gray">Chapter 1: Introduction to Economics</span><span class="divider">/</span></li><li><span class="active">Unit 1.1: Introduction to Economics</span></li></ul>
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<div class="intro-card"><div class="bg-cover" style="background-image: url("/media/ib/economics/images/textbook/introduction-to-economics/occupy.png");"></div><img src="/media/ib/economics/images/textbook/introduction-to-economics/occupy.png" style="display: none" /><div class="content"><p class="text">This unit is an introduction to Economics. It starts by looking at the fundamental economic problem of scarcity and develops this by considering how scarcity leads to choice and opportunity cost. The chapter goes on to cover different economic systems that can exist in a country and finishes by looking at the production possibility curve model.</p></div></div><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h3>What you should know by the end of this chapter:</h3></div></div></div><ul><li>Economics as a social science<img alt="" src="/media/ib/economics/images/textbook/introduction-to-economics/joanna1.jpg" style="float: right; width: 400px; height: 223px;" /></li><li>Difference between microeconomics and macroeconomics</li><li>The economic problem of scarcity</li><li>Unlimited human wants</li><li>Limited factors of production</li><li>Choice</li><li>Opportunity cost</li><li>Economic goods and free goods</li><li>Economic systems of free market capitalism and central planning</li><li>Application of the production possibilities curve model (PPC)<hr class="hidden" /></li></ul><div class="greyBg"><h3>Revision material</h3><p><img alt="" src="/media/ib/economics/images/textbook/revision-material/logo.jpg" style="width: 200px; height: 95px; float: left;" />The link to the attached pdf is revision material from <strong>Unit 1.1: Introduction to Economics. </strong>The revision material can be downloaded as a student handout.</p><p><a href="/media/ib/economics/images/textbook/revision-material/revision-2/introduction-1.1(1).pdf" target="_blank" title="Questions"><img class="ico" src="https://assets.inthinking.net/thinkib/icons/question.png" /> Revision notes</a></p></div><ul></ul><div class="blueBg"><h3><strong>What is economics?</strong></h3><h4><strong>Economics as a social s<img alt="" src="/media/ib/economics/images/textbook/introduction-to-economics/picture1.2.png" style="float: left; width: 368px; height: 207px;" title="https://bbs.wenxuecity.com/wsj/7887.html" />cience</strong></h4><p>Economics is a social science because it studies human behaviour in relation to the economy. Its concepts, principles and laws are based on empirical (past) evidence. Economists, for example, predict that a fall in the price of smartphones will lead to a rise in the quantity sold because it seems logical based on rational consumer behaviour and there is empirical evidence to support this claim.</p><hr class="hidden" /><h4><strong>Ceteris paribus</strong></h4><p>Ceteris paribus (other things remaining constant) applies when considering how one economic variable affects another. If, for example, the price of cinema tickets increases, the quantity demanded for them is expected to decrease, assuming consumer incomes and tastes remain the same. Ceteris paribus is important in economic analysis because it allows us to understand how a change in one economic variable causes changes in other variables by excluding other factors that might also affect the change.</p><h3><strong>Microeconomics and macroeconomics</strong></h3><h4><strong>Microeconomics</strong></h4><p>Microeconomics is the study of the behaviour of individual markets within the economy, particularly the interaction of consumers and producers. We would, for example, study the growth of the market for electric vehicles or the decline of the coal industry in microeconomic terms.</p><h4><strong>Macroeconomics</strong></h4><p>Macroeconomics is the study of the behaviour of the whole economy at a national level. It involves the study of economic issues such as economic growth, inflation, equity and unemployment. Hyperinflation in Venezuela, low unemployment in the United States or high economic growth in Tanzania would all be looked at in macroeconomic terms.</p><p>It is important to understand the crossover between macroeconomics and microeconomics, and how effective economic analysis involves an understanding of the interrelationship between the two. Negative economic growth in Argentina last year is a macroeconomic topic that will have microeconomic implications, such as a fall in demand for products in the luxury goods market.</p><h3><strong>The economic problem</strong></h3><p>Many economists view one of the central themes of Economics as the study of how society allocates scarce resources to satisfy human wants.</p><h4><strong>Human wants</strong><img alt="" src="/media/ib/economics/images/textbook/introduction-to-economics/spotify.png" style="float: right; width: 251px; height: 251px;" title="https://ftalphaville.ft.com/2020/02/05/1580911793000/Spotify--in-tune/" /></h4><p>Human wants are people’s desire to consume goods and services to derive satisfaction from their consumption. Human wants can be expressed as consumer demand in markets. For example, consumers who buy the music streaming service Spotify want to experience the pleasure of listening to music. A want is a complex mixture of reasons why people buy different products. Consumers who go to an exclusive restaurant want to buy food which is a necessity but for other reasons too. They might go to the restaurant to socialise with others or benefit from the feeling of status generated by going to an exclusive restaurant.</p><h5></h5><h4><strong>Resources </strong></h4><p>Resources are the factors of production used to produce goods and services. Resources are often expressed as the factors that determine supply in markets. They include:</p><h5><strong>Land</strong></h5><p>Land provides the raw materials used in production, such as oil, timber, copper, etc. In car manufacturing, for example, the plastic, metal and glass used to make a car are made up of different raw materials that come from the land.</p><h5><strong>Labour</strong></h5><p>Labour are the workers used in the production of goods and services. An airline, for example, employs pilots, cabin crew, and ground staff, in addition to people who work in marketing, finance and administrative roles. </p><h5><strong>Capital</strong></h5><p>Capital is the machinery and equipment used in the production of goods and services. A solar energy provider, for example, utilises solar panels, batteries and transmission infrastructure that provides electricity to its consumers.</p><h5><strong>Entrepreneurship</strong></h5><img alt="" src="/media/ib/economics/images/textbook/introduction-to-economics/musk.png" style="float: left; width: 315px; height: 252px;" title="https://www.vanityfair.com/people/elon-musk" />An entrepreneur is a person or people who bring together and manage the factors of production (land, labour and capital) to produce goods or services to make a profit. For example, the entrepreneur Elon Musk has organised the factors of production used to manufacture Tesla cars to make a profit for himself and his organisation.<hr class="hidden" /><h5><strong>Scarcity</strong><img alt="" src="/media/ib/economics/images/textbook/introduction-to-economics/picture1.6.png" style="float: right; width: 295px; height: 199px;" title="https://www.coinnews.net/2013/02/02/gold-and-silver-prices-rebound-log-weekly-increase/" /></h5><p>All the resources used to produce goods and services are in limited supply. This means unlimited human wants are chasing too few resources, which is the central economic problem of scarcity. Gold, for example, is limited in supply which makes it a scarce commodity. The demand for gold comes from its attractiveness as a precious metal for jewellery, its industrial uses and its value as an asset. Gold’s relative scarcity gives it a high price as a commodity. Its current price is nearly $2000 an ounce. </p><h4></h4><h3><strong>Economic goods and free goods</strong></h3><h4>Economic goods</h4><p>Economic goods are products produced using scarce resources.</p><h4>Free goods</h4><p>Free goods arise because some resources in certain situations are not scarce. Economists consider the air we breathe, sunlight and wind as free goods. Goods and services that are available to consumers at zero price, such as state education, are not free goods because they are produced using scarce resources.</p><h4><strong>Allocation of resources</strong></h4><p>The allocation of resources means the distribution of the factors of production to produce different goods and services in an economy. The sale of electric cars, for example, is expected to grow to 40 per cent of all car sales by 2030. This means a movement of factors of production towards the production of electric cars and fewer resources being used to produce petrol and diesel vehicles.</p><h4><strong>The economic problem and sustainability<img alt="" src="/media/ib/economics/images/textbook/introduction-to-economics/deforestation.png" style="width: 400px; height: 325px; float: left;" title="https://www.mining.com/peru-to-penalize-illegal-gold-mining-with-up-to-12-years-in-prison/" /></strong></h4><p>One of the key issues of the economic problem is how the use of scarce resources to produce goods and services in the present impacts their availability in the future, as well as the wider implications for the environment. When the Amazon rainforest is cut down to create farmland it causes soil erosion which reduces the amount of productive farmland in the future, increasing its scarcity. Deforestation also has economic costs in terms of climate change, reduced biodiversity and the negative impact on the indigenous community who live in the rainforest.</p></div><div class="pinkBg"><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h4><strong>Inquiry case example - Scarcity and the Hong Kong property market</strong></h4></div></div><img alt="" src="/media/ib/economics/images/textbook/introduction-to-economics/hong-kong.png" style="width: 400px; height: 287px; float: right;" title="https://www.flickr.com/photos/59238173@N07/6692274981/" /></div><p>Hong Kong has the most expensive real estate in the world. It is one of Asia’s leading business and financial centres. The average cost per square metre of an apartment on Hong Kong Island is US$16,000. A $446 million mansion for sale in Hong Kong's exclusive Peak district is one of the most expensive houses ever sold. Renting in Hong Kong is not any cheaper. Family houses in the best areas rent for anything up to US$30,000 per month. Scarcity in the Hong Kong property market is a key reason for its high prices.</p><hr class="hidden" /><p>Hong Kong is one of the most densely populated areas in the world with a density of 6,659 people per square kilometre, which puts it in the top 3 countries for population density in the world. Lots of people want to live on a relatively small piece of land. It is also a very attractive place to live, with plenty of high-paying jobs, and lots to do and, in its own way, it is a strikingly beautiful city landscape to live in.</p><p><a href="/media/ib/economics/images/textbook/introduction/questions/hong-kong.pdf" target="_blank" title="Questions"><img class="ico" src="https://assets.inthinking.net/thinkib/icons/question.png" /> Worksheet questions</a> </p><h4><strong>Questions</strong></h4><p><strong>a. Explain the different human wants that create demand for housing in Hong Kong. [4]</strong></p><section class="tib-hiddenbox"><p>People might want to buy housing in Hong Kong for the following reasons: shelter, security, status, investment, near to where they work, close to their friends and family and the pleasure of living in a good location.</p></section><p><strong>b. Outline the four resources used to produce housing in Hong Kong. [4]</strong></p><section class="tib-hiddenbox"><p>The four resources to build housing would be land for building materials, labour to work in construction, capital for building such as cranes and enterprise in the form of construction businesses.</p></section><p><strong>c. Explain how scarcity leads to such a high price of housing in Hong Kong. [4]</strong></p><section class="tib-hiddenbox"><p>Because land is in such limited supply in Hong Kong and demand for housing is so high it makes housing in Hong Kong very scarce and leads to high prices for housing.</p></section><p><strong>d. Explain two consequences of high house prices on individuals in Hong Kong. [4]</strong></p><section class="tib-hiddenbox"><p>High house prices in Hong Kong can have the following consequences for house buyers:</p><ul><li>Housing may be unaffordable for low-income groups</li><li>Housing costs might account for a high proportion of household incomes</li><li>People might be forced to live in lower-cost, poor-quality housing</li><li>People might be forced to live in lower-cost areas of Hong Kong</li><li>It could lead to a rise in homelessness.</li></ul></section><h5><strong>Investigation</strong></h5><p><strong>Research property markets in other major cities to see if scarcity has the same effect on prices.</strong></p></div><div class="blueBg"><h3><strong>Choice</strong></h3><h4><strong>Scarcity and choice</strong></h4><p>Th<strong><img alt="" src="/media/ib/economics/images/textbook/introduction-to-economics/choice.jpg" style="float: left; width: 296px; height: 232px;" title="https://wefixfeet.co.uk/blog-post/tips-for-choosing-trainers/" /></strong>e central economic problem of scarcity forces different stakeholders in the economy to make choices between alternatives because they cannot get everything they would like to have. An individual might have to choose between going on holiday or buying new clothes, a firm may have to decide not to hire new employees if they invest in new machinery and a government might have to reduce spending on education if it decides to spend more on defence.</p><hr class="hidden" /><h4><strong>Opportunity cost</strong></h4><p>Opportunity cost is the highest value alternative foregone for the option chosen in a decision-making situation. It arises because of scarcity which forces individuals, firms and governments to choose between alternatives.</p><p>The opportunity cost of a decision represents the value an individual or organisation puts on the choice they have made. The more you are prepared to forego to obtain something, the greater the value you put on your choice.</p><h5><strong>Opportunity cost and different stakeholders</strong></h5><h5><strong>Individuals</strong></h5><p>This could be where people choose to use their limited income to buy a good rather than spending their money on something else. If someone spends $9 a month on a Netflix subscription then the opportunity cost might be choosing not to use that money to go to the cinema.</p><h5>Businesses</h5><p>When businesses use their funds to invest in a project there will be an opportunity cost in terms of an alternative use of the funds. For example, the car manufacturer, Volkswagen, plans to spend 30 billion Euros in the next 5 years on developing electric vehicles. The opportunity cost of this might be using this money to develop petrol or diesel cars.</p><h5>Governments</h5><p>Gover<img alt="" height="194" src="/media/ib/economics/images/textbook/introduction-to-economics/boarder-wall.png" style="float: left;" title="https://www.washingtonpost.com/outlook/2019/01/09/hole-donald-trumps-wall/" width="291" />nments face an opportunity cost when they are deciding between different items of public expenditure. The US government under Donald Trump, for example, planned to build a wall between the US and Mexico at a cost of $21 billion. The opportunity cost of this might have been spending less on improving America’s roads.</p><hr class="hidden" /><h5>Society</h5><p>When resources are allocated in an economy, there is an opportunity cost in terms of what else the resources could be used to produce. Japan, for example, plans to increase its provision of electricity generated by renewable sources from 10 per cent now to 25 per cent by 2030. The opportunity cost of this might be less electricity being generated using fossil fuels.</p><h5><strong>Importance of opportunity cost</strong></h5><p>Opportunity cost is an important concept in Economics because it allows consumers, producers and governments to assess the implications of the decisions they make in terms of what they are prepared to sacrifice when a choice is made. Opportunity cost allows us to put a value on things. The more we are prepared to sacrifice (the greater the opportunity cost) in a decision-making situation the more value we put on something.</p></div><div class="pinkBg"><div class="panel" style="box-shadow: rgba(0, 0, 19, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h4>Inquiry case example - Opportunity cost and the value of a concert ticket</h4></div></div><div class="panel-footer" style="background-color: rgba(39, 45, 105, 0.1);"><div><p>text</p></div></div></div><p><img alt="" src="/media/ib/economics/images/textbook/introduction/bts.jpg" style="width: 300px; height: 182px; float: left;" />When the Korean pop band, BTS toured the US 2 years ago the average price for a ticket on the secondary market was $478 - over 5 times the official ticket price. BTS's fans have a relatively young age profile and will not be on particularly high incomes. The $478 ticket price would represent a significant sacrifice for them and would be a high opportunity cost. The high opportunity cost for a BTS fan of choosing to buy a ticket and attend one of their concerts shows how much value they put on seeing their favourite artists perform.</p><hr class="hidden" /><p><a href="/media/ib/economics/images/textbook/introduction/questions/bts-opportunity-cost.pdf" target="_blank" title="Questions"><img class="ico" src="https://assets.inthinking.net/thinkib/icons/question.png" /> Worksheet questions </a></p><p><strong>Questions</strong></p><p><strong>a. Define the term opportunity cost. [2]</strong></p><section class="tib-hiddenbox"><p>Opportunity cost is the highest value alternative foregone for the option chosen in a decision-making situation.</p></section><p><strong>b. Explain how scarcity leads to opportunity cost in the decision to buy BTS tickets. [4]</strong></p><section class="tib-hiddenbox"><p>Scarcity occurs when human wants are greater than available resources. In the case of individuals who want to see a BTS concert the human wants for BTS tickets are extremely high because of the satisfaction, individuals derive from a BTS live performance. The resources available to put on a BTS concert are limited in supply. The high level of wants for BTS tickets relative to their limited supply means the ticket price is high at $478 which means BTS fans have a significant opportunity cost of buying a ticket.</p></section><h5><strong>Investigation </strong></h5><p><strong>Think about an event you or someone else in your class was prepared to make a significant sacrifice to attend. </strong></p><p><strong>What was the opportunity cost of attending the event?</strong></p></div><div class="blueBg"><h3><strong>Economic Systems<img alt="" src="/media/ib/economics/images/textbook/introduction-to-economics/capitalism.png" style="float: right; width: 351px; height: 236px;" title="https://www.adamsmith.org/blog/this-is-not-capitalism-this-is-economics" /></strong></h3><h4><strong>Economic systems and the allocation of resources</strong></h4><p>An economic system is a way in which society is organised and governed, and how this affects the resource allocation in the economy. Economists often consider the allocation of resources by an economic system in terms of 3 questions:</p><hr class="hidden" /><h5>What goods and services are produced?</h5><p>This means what goods and services are available to a country’s population such as consumer goods like cars and mobile phones, to wider services such as health and education.</p><h5>How are goods and services produced?</h5><p>This question is about ownership of the factors of production used to produce goods and services in the economy. This is normally looked at in terms of private businesses and state-managed enterprises.</p><h5>Who the goods and services produced are distributed to?</h5><p>The distribution of goods and services is often related to income distribution in terms of the income individuals receive. For example, the households that earn the highest incomes in society can afford to buy (get distributed) the most goods and services.</p><h4><strong>Free market economies</strong></h4><div class="polaroid-right"><img src="/media/ib/economics/images/textbook/chapter-1/occupy.png" style="margin:8px 0" /><img alt="" src="/media/ib/economics/images/textbook/introduction-to-economics/occupy.png" style="width: 400px; height: 325px;" title="https://www.wealthmanagement.com/blog/inside-occupy-wall-street-financial-advisors-view-inside" /><div class="caption">The Occupy Wall Street protests. Not everyone likes free markets.</div></div><h5><strong>What goods and services are produced?</strong></h5><p>In a free market economy, consumer sovereignty decides what goods and services are produced. Consumer sovereignty refers to the ultimate power of the consumer in the economy to determine resource allocation. If consumers demand a particular good resources will be allocated to produce the product as entrepreneurs see the opportunity to make a profit from selling it to consumers. This process takes place through the price mechanism which is the communication system that exists between consumers and producers in a free market economy.</p><hr class="hidden" /><p>Consumers, for example, want to go out and drink high-quality coffee and eat food in an attractive café environment. This has probably been the driving factor leading to the growth of the coffee shop market which is supplied by profit-making producers like Costa Coffee, Starbucks and Café Nero.</p><h5><strong>How are goods and services produced?</strong></h5><p>Goods and services are produced by firms that are owned by individuals (known as private capital) who look to make a profit by producing those goods or services. Advocates of free market economies argue that competition between private firms means that consumers get a wider choice of goods at lower prices relative to more state-controlled economic systems.</p><p>Producers in the sportswear market such as Adidas and Nike manufacture and sell their goods globally. Competition between these two producers, along with other firms in the market, gives consumers the choice of different products to buy at affordable prices.</p><h5><strong>Who the goods and services produced are distributed to?</strong></h5><div class="polaroid-left"><img height="277" src="/media/ib/economics/images/textbook/introduction-to-economics/serena.png" style="margin: 8px 0px;" title=" [https://www.cheatsheet.com/entertainment/serena-williams-net-worth-how-much-does-the-tennis-player-make.html/] " width="369" /><div class="caption">Serena Williams's net worth is estimated to be $180 million.</div></div><p>Goods and services are distributed in the economy through the price mechanism which acts as a rationing system. People who are willing and able to pay the price for the products available in the market will obtain them. The higher an individual’s income, the more goods and services they can buy. In a free market economy, an individual’s income is determined by the demand and supply for the work they do.</p><hr class="hidden" /><p>Sports stars like Cristiano Ronaldo and Serena Williams are paid high wages partly because there is such a limited supply of people with that level of talent in their respective sports, meaning that there is high demand for their services. People are willing to pay high prices to watch them play live and through television subscriptions. They also help to sell lots of sportswear and other products.</p><h5>Evaluation of free market capitalism</h5><p>Empirical evidence from the last 100 years shows many of the benefits free markets can bring to societies whose economies are based on capitalist principles. The economic success of the United States is often held up as a model of this and in more recent times the adoption markets in China have shown how it can lead to rising prosperity in the population in a relatively short period of time.</p><p>Free market capitalism does, however, have significant weaknesses in the form of market failures:</p><ul><li>Externalities</li><li>Merit and demerit goods</li><li>Public goods</li><li>Common pool/access resources</li><li>Asymmetric information</li><li>Monopoly</li><li>Inequity</li></ul><p>These market failures are covered in Unit 2.8 of this textbook. <a href="economics/page/33665/unit-281-market-failure-externalities" title="Textbook » Chapter 2 » Unit 2.8(1): Market Failure – Externalities">Unit 2.8(1): Market Failure – Externalities</a> </p><hr class="hidden" /><h4><strong>Command or planned economies</strong></h4><p>In planned or command economies the allocation of resources that takes place through the interaction of consumers and producers is replaced by the state. The private ownership of the factors of production is transferred to the government.</p><p><strong>What goods and services are produced?</strong></p><p>In a planned economy the government or planning authority determines what is produced based on what they believe the people of their country want. In many of the Eastern European countries that adopted a command-type economic system for several decades in the 20th Century, the planners would decide what to produce based on household needs. This could be from the quantity of milk to the number of shoes they forecast the population would need.</p><p><strong>How are goods and services produced?</strong></p><p>State-managed organisations produce goods and services in a command economy. Once the planners have forecasted the goods and services they need to produce, they then set production targets for industries which become targets for individual producers to achieve. The planners in the former Soviet Union would set industrial output objectives for clothing, and the state-managed enterprises would have to achieve these objectives. Producers were not incentivised by profit but by the desire to satisfy the planners. </p><p><strong>Who the goods and services produced are distributed to?</strong></p><p>This was one of the most important aspects of the command system for former communist countries in Eastern Europe and Asia. A primary aim for these societies was equality in the distribution of goods and services. This could be expressed as one of socialism’s aims of greater income equality. Countries like the former USSR would focus their distribution of goods and services based on need rather than want. Everyone, for example, in the USSR should have a place to live, access to necessities such as food and clothing, along with the provision of education and healthcare for all.</p><h5><strong>Evaluation of planned or command economies</strong></h5><p>Empirical evidence suggests relatively poor economic performance in countries that have adopted a planned economic system such as in Eastern Europe up until the late 1980s. Nations like the former USSR, East Germany and Poland experienced a very slow improvement in household incomes and the overall quality of life of their populations. The weaknesses of planning can be looked at in three ways:</p><ul><li>It is very difficult for a government to efficiently plan the billions of resource allocation decisions that take place every day in an economy.</li><li>Without the incentive to earn high incomes and profits individuals in a planned system are not as motivated to work as hard and innovate in the way they might do in a market system.</li><li>Government-managed systems involve considerable bureaucracy in the management of state-run enterprises which reduces their efficiency.</li><li>Economic decision-making by governments always involves politics and political decisions were often taken instead of the right economic decisions.</li></ul><hr class="hidden" /><h4><strong>Mixed economies</strong></h4><p>In reality, all economies are a mixture of the public (government) and private sectors. It is just the degree of planning and free market influence on the allocation of resources that differs between countries. The decline of command economic systems in Eastern Europe and Asia in the second half of the 20<sup>th</sup> century has seen a greater influence for the market in many countries.</p><p>Different countries have varying levels of state and private sector involvement in the allocation of resources. The Nordic countries of Norway, Sweden, Denmark and Finland have relatively high proportions of state involvement in their economies, whereas countries like the US, UK and Australia have a greater emphasis on the market. That said, UK government expenditure is still nearly 40 per cent of GDP.</p><p>In mixed economies, governments are normally involved in the provision of public goods (police, defence and infrastructure) and public services like health and education. Private firms make up the other commercial sectors of the economy. It should be noted, however, that those private companies are still involved in public services such as healthcare and education.</p><h3></h3></div><div class="pinkBg"><div class="panel" style="box-shadow: rgba(0, 0, 19, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p>Inquiry case example - Back in the USSR</p></div></div><p> <img alt="" src="/media/ib/economics/images/textbook/introduction/russian-poster.jpg" style="float: right; width: 178px; height: 300px;" title="https://www.pinterest.ch/pin/654429389581104826/" /></p><p>Research into the Soviet Union in the 1970s, ten years before the end of communism in Eastern Europe, showed the following observations:</p><ul><li>Only two-thirds of Soviet families had a fridge in their home compared to over 90% in Western Europe.</li><li>Soviet households had to wait years to buy consumer goods like fridges, cookers and televisions.</li><li>Five million households in the USSR had cars compared to 100 million in the US.</li><li>Life expectancy fell in the USSR during the 1960s and 1970s.</li><li>15% of the population lived in areas with pollution 10 times normal levels.</li><li>Using the US measure of poverty over 50% of the USSR population was poor compared to 12% in Western Europe.</li><li>A winter coat in the USSR cost a whole month’s wages.</li></ul><p><a href="/media/ib/economics/images/textbook/introduction/questions/command-economy.pdf" target="_blank" title="Questions"><img class="ico" src="https://assets.inthinking.net/thinkib/icons/question.png" /> Worksheet questions</a></p><h4>Questions</h4><p><strong>Outline the economic system that existed in the USSR in the 1970s. [4]</strong></p><section class="tib-hiddenbox"><p>The USSR used a command economic system where the central planners (government) decided what was produced, state-managed enterprises produced goods and services and the income from the output produced was distributed based on need.</p></section><p><strong>Explain two disadvantages of the economic system adopted in the USSR in the 1970s. [4]</strong></p><section class="tib-hiddenbox"><p>Two disadvantages of central planning for the USSR from:</p><ul><li>It is difficult for a government to efficiently plan the billions of resource allocation decisions</li><li>The lack of incentive for individuals to earn high incomes and profits</li><li>Bureaucracy in the management of state-run enterprises</li><li>Political decisions are taken instead of the right economic decisions.</li></ul></section><div class="panel-footer" style="background-color: rgba(39, 45, 105, 0.1);"><div><p>text</p></div></div></div></div><div class="blueBg"><h3><strong>Production Possibility Curve (PPC)</strong></h3><h4><strong>Definition of production possibility curve</strong></h4><p>A production possibility curve is a model that shows the maximum relative amounts of two goods a country can produce with a given availability of resources at a point in time. </p><p>Economic models are used by economists to help them understand how the economy works. They can be used to explain what has happened in the past and as a basis for making predictions about the future. Production possibility curves are a very simple model that can be used to illustrate the basic economic concepts of scarcity and opportunity cost. The most advanced computer-based models are used by governments and financial institutions to make forecasts about the changes in the economy.</p><h4><strong>The production possibility curve diagram</strong></h4><p>The PPC model is based on the relative quantities of any two goods that can be produced by an economy. General markets, such as capital goods and consumer goods, can be used, or more specific markets such as sugary soft drinks and bottled water. The key purpose of the model is to show the relative output of the two goods produced using scarce resources.</p><p>In this example, an economy can produce different relative quantities of wine and sugar from its available resources, and this is shown by the PPC in diagram 1.1. The pattern of consumer demand in the economy means that it can produce 160 units of wine and 70 units of sugar simultaneously, and this is shown by point F on the diagram.</p><h4><strong>Production possibility curves, scarcity and opportunity cost </strong></h4><p>The PPC curve shows how the output of 2 goods is limited by the scarcity of available factors of production in an economy at a certain point in time. Scarcity means producing more of one good on the PPC leads to an opportunity cost in terms of the other good produced.</p><hr class="hidden" /><p><img alt="" height="283" src="/media/ib/economics/images/textbook/introduction-to-economics/diagram-1.1.png" style="float: right;" width="406" /></p><p>Opportunity cost is one of the key concepts illustrated by the model. In diagram 1.1, if the economy produces 200 units of wine it forgoes the production 100 units of sugar. Producing 100 units of sugar would mean giving up the production of 200 units of wine. By producing at point F on the PPC the country produces 160 units of wine with an opportunity cost of 30 units (100 units – 70 units) of sugar. At point F it also produces 70 units of sugar, so there is an opportunity cost of 40 units (200 units – 160 units) of wine.</p><hr class="hidden" /><h4><strong>The shape of the production possibility curve</strong></h4><h5><strong>Increasing cost PPCs</strong></h5><p>Most of the theory covered in this text uses increasing cost PPCs that are curved outwards because as more resources are allocated to the production of a good, the opportunity cost in terms of the other good foregone increases. This is because some resources are better suited to the production of one good than they are to another. In the PPC in diagram 1.1, increasing the production of wine means an increasing opportunity cost of sugar because some resources are better suited to wine production than sugar production. For example, as more land is allocated to the production of wine from sugar the land will be less and less productive for each extra unit of wine production. So for each extra unit of wine produced, the opportunity cost in terms of sugar production given up gets greater and greater.</p><h5><strong>Constant cost PPCs<img alt="" height="294" src="/media/ib/economics/images/textbook/introduction-to-economics/diagram-1.2.png" style="float: left;" width="413" /></strong></h5><p>For some aspects of economic analysis, it is easier to use the constant cost PPC curve, where the PPC is a straight line and the opportunity cost stays the same as the output of one good increases and the other decreases. In diagram 1.2 the PPC for wine and sugar production is linear and the opportunity cost remains the same as resources are switched from sugar to wine production. The constant cost PPC model is often used when analysing specialisation in international trade.</p><hr class="hidden" /><hr class="hidden" /><h4><strong>Production possibility curves and economic efficiency</strong></h4><p><strong><img alt="" height="324" src="/media/ib/economics/images/textbook/introduction-to-economics/diagram-1.3.png" style="float: right;" width="467" /></strong>Productive efficiency occurs in an economy when all available resources are being used and they are achieving the highest possible output. This means that the labour force is employed and there is full utilisation of available capital in the economy. All points on the production possibility curve represent a productively efficient use of resources. This is called the potential output of the economy. In diagram 1.3, point F is a productively efficient level of output.</p><hr class="hidden" /><hr class="hidden" /><p>In reality, all economies produce within their PPC because there is always some unemployment and capital that is not being utilised. For example, in Japan last year the rate of unemployment was 2.2 per cent and the lowest it had been in the last 100 years was 1 per cent. The point within the PPC that an economy produces at the current point in time is called actual output. This is shown in diagram 1.3 at point G.</p><h4><strong>Growth in production possibilities</strong></h4><div><strong><img alt="" height="303" src="/media/ib/economics/images/textbook/introduction-to-economics/digram-1.4.png" style="float: left;" width="437" /></strong>One of the key applications of the PPC model is to illustrate growth in production possibilities where the potential output of an economy grows over time. As potential output increases, the PPC shifts outwards and the economy can now produce more of both goods in the PPC diagram. This is shown in diagram 1.4. In the diagram, PPC shifts to PPC1 and potential output increases from point F to point G. This means that the potential output of the economy increases from 70 units of sugar to 85 units and from 160 to 180 of wine.</div><hr class="hidden" /><p>The growth in production possibilities often occurs because of an increase in available resources or existing resources become more productive. This could be because of greater use of capital, improvements in technology and a more educated labour force. Tanzania, for example, was one of the fastest-growing Economies in Africa last year. One of the key drivers of this is foreign direct investment (FDI) and significant infrastructure improvement, both of these factors would increase Tanzania's potential output.</p></div><div class="pinkBg"><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h4><strong>Inquiry case example - Opportunity cost and military spending in the US</strong></h4></div></div></div><p><img alt="" src="/media/ib/economics/images/textbook/introduction/us-defence.jpg" style="float: right; width: 400px; height: 231px;" />America’s military budget has grown for five consecutive years. Republican lawmakers have pushed defence spending well above 3 per cent of GDP. At the same time, the administration has cut domestic programs, such as education. Under its budget plan, the United States is expected to spend more on its military in 2021 than at any point since the Second World War.</p><hr class="hidden" /><p>Government spending decisions represent clear opportunity cost situations. The administration’s decision to increase defence spending can be viewed in terms of the opportunity cost of fewer funds available for expenditure on education. The reasons for the US government’s decision to spend more on defence may well be viewed in terms of the greater political value it currently places on increased defence spending relative to education.</p><p><a href="/media/ib/economics/images/textbook/introduction/questions/defence-spending.pdf" target="_blank" title="Questions"><img class="ico" src="https://assets.inthinking.net/thinkib/icons/question.png" /> Worksheet questions</a></p><h4><strong>Questions</strong></h4><p><strong>a. Outline what a production possibility curve shows. [2]</strong></p><section class="tib-hiddenbox"><p>A production possibility curve is a model that shows the maximum amount of two goods a country can produce with a given availability of resources at a given point in time. </p></section><p><strong>b. Using a PPC diagram explain the effect an increase in US government spending on defence might have on education. [4]</strong></p><section class="tib-hiddenbox"><p><img alt="" src="/media/ib/economics/images/textbook/introduction/us-defence-ppc.jpg" style="float: right; width: 400px; height: 279px;" />The PPC diagram shows how greater US spending on defence means more resources are allocated to defence goods. With scarce resources in the US economy, this would mean fewer resources being allocated to education goods. This means an increase in resources allocated to defence goods from 120 to 140 units would lead to an opportunity cost of education goods of 20 units (100 units - 80 units).</p><hr class="hidden" /></section><p><strong>c. Using the production possibility curve model, explain the concepts of scarcity and opportunity cost in the allocation of resources in national defence. [10]</strong></p><section class="tib-hiddenbox"><p>Answers might include:</p><ul><li>Definitions of scarcity, opportunity cost, PPC, and allocation of resources</li><li>An explanation of scarcity as it relates to national defence in terms of the limited land, labour, and capital to produce defence goods such as tanks, missiles and ammunition. </li><li>An explanation that the allocation of resources to defence can be looked at as the amount of resources allocated to defence production in the economy. </li><li>The explanation is that the limited resources used to produce defence goods lead to choice and opportunity cost. This could be an opportunity cost in terms of resources allocated to education that are foregone if more resources are allocated to defence. </li><li>An example of opportunity cost from the perspective of the US government. If the US government increases the resources it uses for defence then the highest value alternative might be fewer resources being allocated to healthcare.<hr class="hidden" /></li><li><img alt="" src="/media/ib/economics/images/textbook/introduction/us-defence-ppc.jpg" style="float: right; width: 400px; height: 279px;" />PPC diagram to show more resources being allocated from healthcare to defence in the US leading to an opportunity cost in terms of healthcare. </li></ul></section><p><strong>Research another government decision that involves an opportunity cost. </strong></p><p><strong>Discuss with your class the economic consequences of the US government's decision to prioritise military spending. </strong></p></div><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel panel-has-footer" style="box-shadow: rgba(51, 0, 0, 0.3) 0px 10px 30px -15px; border-color: rgb(124, 7, 21);"><div class="panel-heading" style="background-color: rgb(124, 7, 21);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h4>Thinking about a key concept - Scarcity</h4></div></div><div class="panel-body"><div><p>You have been introduced to the key concept of scarcity in this chapter. It arises because human wants are greater than available resources. In the two inquiry case examples in this chapter on the Hong Kong property market and US defence spending think about the importance of scarcity in the way it affects the different stakeholders in both case studies. For example:</p><p><strong>How might low-income households be affected by scarcity in the Hong Kong property market?</strong></p><p><strong>How might healthcare providers in the US be affected by such a significant increase in US defence spending?</strong></p></div></div></div><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h3>Now test yourself</h3></div></div></div><div class="tib-quiz" data-quiz-id="963" data-structure="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" data-score-answers="6d4a526a457a48584f763758344a7649472f76324c53614b78524c393439595570496d5a5971374b38686f3d"><div class="exercise"><div class="q-question"><p>Which of the following is not a factor of production?</p></div><div class="q-answer"><p><label class="radio" data-answer="e74d2fccf020efeca4248ef232aabe5b"><input type="radio" /><span>An individual that started a business </span></label></p><p><label class="radio" data-answer="389abf7bcc4982e67270b4d8f6485402"><input type="radio" /><span>An office building </span></label></p><p><label class="radio" data-answer="8a71e463c619d2c34fe945796feb715e"><input type="radio" /><span>Workers on a production line </span></label></p><p><label class="radio" data-answer="a55b5d72dd876a4daf457dd306ee75cc"><input type="radio" /><span>Money in a business bank account </span></label></p></div><div class="q-explanation"><p>Money is not a factor of production - the others all are.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is a free good?</p></div><div class="q-answer"><p> <label class="radio" data-answer="cbb9b6f3a5f2079e8f74ee3d585f45dd"><input type="radio" /><span>Something that satisfies human wants that is not produced using scarce resources </span></label></p><p> <label class="radio" data-answer="374b3277fbfab624f7c86a8664f1a798"><input type="radio" /><span>Healthcare in a country where you do not have to pay </span></label></p><p> <label class="radio" data-answer="80f9cb3c3c0f0d90604f7932cb896308"><input type="radio" /><span>A free gift that comes with a subscription to a new website </span></label></p><p> <label class="radio" data-answer="7aaf2038fc6d8af0ecbbeec505ed17f5"><input type="radio" /><span>A free good that comes when a supermarket makes a buy-one-get-one-free offer </span></label></p></div><div class="q-explanation"><p>A good is free when it exists without the use of scarce resources.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is not a characteristic of a pure free market economy?</p></div><div class="q-answer"><p><label class="radio" data-answer="bf084aaef90873c95ac9c5d43156a744"><input type="radio" /><span>Consumer sovereignty </span></label></p><p><label class="radio" data-answer="8eb9c20cf393ddd5c3f1089d33f1f4e3"><input type="radio" /><span>Government provides the road system </span></label></p><p><label class="radio" data-answer="85fd75d88549219a25e75bd81fd2b8ea"><input type="radio" /><span>Price mechanism guides the allocation of resources </span></label></p><p><label class="radio" data-answer="b8cc269725d31479c452186ccfa76c42"><input type="radio" /><span>Private businesses produce goods and services </span></label></p></div><div class="q-explanation"><p>The only role for the government in a pure free market is to provide a legal framework to support trade.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following will increase potential output and cause the PPC of a country to shift outwards?</p></div><div class="q-answer"><p><label class="radio" data-answer="63af09d374b38022db68a440501775ae"><input type="radio" /><span>More efficient use of capital </span></label></p><p><label class="radio" data-answer="29c591a307e3f3c3f358442711b3f242"><input type="radio" /><span>A rise in wages </span></label></p><p><label class="radio" data-answer="42540f942321182b8a6ef0ae3c2dc04b"><input type="radio" /><span>New technological development </span></label></p><p><label class="radio" data-answer="3ff48d8ddb61b51c0d09a09f955b76af"><input type="radio" /><span>An increase in employment in the country </span></label></p></div><div class="q-explanation"><p>As technology improves in the economy the output from existing resources can be increased.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Using the PPC diagram, which of the following is correct?</p><p><img alt="" height="256" src="/media/ib/economics/images/textbook/mc-questions/ppc.jpg" width="370" /></p></div><div class="q-answer"><p><label class="radio" data-answer="4dd0507928f78cd56bbd43f5dba65dd3"><input type="radio" /><span>There is a greater demand for good B than there is for good A </span></label></p><p><label class="radio" data-answer="260df20fdfb28e22f662cfe3ce08287f"><input type="radio" /><span>The opportunity cost of producing 280 units of good B is 140 units of good A </span></label></p><p><label class="radio" data-answer="a2e202cc9de3518dacf138cd32a6f4b9"><input type="radio" /><span>There is an under-utilisation of resources in the economy </span></label></p><p><label class="radio" data-answer="5499cf350693c51782d7f6f4725ac1b8"><input type="radio" /><span>Producing 200 units of good B means foregoing the production of 50 units of good A </span></label></p><p> </p></div><div class="q-explanation"><p>The opportunity cost of producing 200 units of good B is (190 - 140) 50 units of good A.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Using the PPC diagram, which of the following is not true?</p><p><img alt="" src="/media/ib/economics/images/textbook/introduction/ppc.jpg" style="width: 400px; height: 269px;" /></p></div><div class="q-answer"><p><label class="radio" data-answer="fb8c7f0b6ac704dc7bb33148e27719f3"><input type="radio" /><span>The opportunity cost of increasing output of good B from 140 to 180 units is 50 units of good A </span></label></p><p><label class="radio" data-answer="66c9a17dbf82b9ebd3f780e96fd275f5"><input type="radio" /><span>The economy is producing efficiently at points F and G </span></label></p><p><label class="radio" data-answer="0e3a7a4bd42f375b1b913bf53f55729d"><input type="radio" /><span>This economy will always produce on the PPC </span></label></p><p><label class="radio" data-answer="ff79b1fca7bc437824ddd2416fc76e43"><input type="radio" /><span>The movement along the PPC from point F to point G could be described as a reallocation of resources </span></label></p></div><div class="q-explanation"><p>This economy could produce inefficiently and be inside the PPC.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is the most accurate definition of opportunity cost?</p></div><div class="q-answer"><p><label class="radio" data-answer="2d72e268ebd52a83e71391f7ea753375"><input type="radio" /><span>The highest value alternative given up to get the option chosen in a decision-making situation </span></label></p><p><label class="radio" data-answer="cbabb8b0d3c082d319be020fe012936c"><input type="radio" /><span>The price you pay for a good when you buy it </span></label></p><p><label class="radio" data-answer="3d7695bd5e4a488f225f00a853e16abf"><input type="radio" /><span>In a buying decision, it is what you have to give up in order to afford something </span></label></p><p><label class="radio" data-answer="4f903d2b89fad41d839edb91eb8b9d51"><input type="radio" /><span>When a business invests in a new factory, it is the interest cost on the loan they take out </span></label></p></div><div class="q-explanation"><p>Opportunity cost is the highest value alternative given up to get the option chosen in a decision-making situation</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Scarcity of resources in a market economy means that:</p></div><div class="q-answer"><p><label class="radio" data-answer="306e2f4b157648c24fa7868432ffcdb8"><input type="radio" /><span> Inflation will always be a problem</span></label></p><p><label class="radio" data-answer="cc773d0468bb18b89c43a4daebc6a5b2"><input type="radio" /><span> The economy cannot produce on its production possibility curve</span></label></p><p><label class="radio" data-answer="77a0b6607c362d6b5e9388f5e19ac360"><input type="radio" /><span> Economic recessions are inevitable</span></label></p><p><label class="radio" data-answer="49205d0b2f1bb8763ceccf447a6eef6b"><input type="radio" /><span> Consumers and producers will face an opportunity cost when they make decisions</span></label></p></div><div class="q-explanation"><p>Because of scarcity consumers and producers have to make choices and this leads to an opportunity cost.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Economics is a subject that is focused on the study of:</p></div><div class="q-answer"><p><label class="radio" data-answer="9a3e352ca501a307104ef2a4536f2523"><input type="radio" /><span> How the government allocates its funds to different types of public spending</span></label></p><p><label class="radio" data-answer="19dd33a6b711abeb22755f045e7b3844"><input type="radio" /><span> How resources can be used more efficiently to satisfy human wants</span></label></p><p><label class="radio" data-answer="33f8da747f4298eac31edb17b7d20fc5"><input type="radio" /><span> How scarce resources are allocated to satisfy unlimited human wants</span></label></p><p><label class="radio" data-answer="a859947d1e6be2949eba03cf570eedc7"><input type="radio" /><span> How new economic resources are used by businesses</span></label></p></div><div class="q-explanation"><p> </p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is true when scarce resources are allocated efficiently?</p></div><div class="q-answer"><p><label class="radio" data-answer="077de773e9d845279bc964671c3b23fc"><input type="radio" /><span> Equal amounts of land, labour and capital are used in producing goods or services</span></label></p><p><label class="radio" 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