IB Economics online textbook

Introduction to the textbook

Aims of this textbook

The aim of this book is to support students and teachers as they follow the new IB Economics course specification which starts in 2020 and has its first assessment examinations in 2022.

In order to effectively support students and teachers in Economics, this online textbook covers each aspect of the IB Economics course. It precisely follows the Economics syllabus set out in the IB guide.

Inquiry based approach

An important theme of the new IB Economics specification is inquiry based learning. Looking at Economics through prism of exciting real world examples that truly bring the subject to life. This book aims to give students the knowledge and skills to be able to investigate, understand and debate the issues of real world Economics. An example of the textbook's inquiry based approach is set out below.

Examination practice questions

All the inquiry case examples come with examination style questions written in the Economics IB format. This includes the approach used in the paper 1 (essay paper), paper 2 (data response paper) and paper 3 (policy paper). All the questions come with markscheme answers that use a 'scaffolding' approach to guide students when they are answering questions. An example of IB examination style questions from the textbook is set out below.

Sample inquiry case example - The falling price of the mobile phone

The price of mobile phones has fallen dramatically since they were first released onto the consumer market in the United States in the early 1980s. The data in the table sets out the change in price and ownership of mobile phones from 1993 to 2013 in the US.


a. Define the term demand. [2]

Demand is the willingness and ability of consumers to pay a sum of money for a good or service at a given price and at a given point in time.

b. Outline the law of demand. [2]

The law of demand states that as the price of a good or service rises, the quantity demanded falls and as the price of a good falls, the quantity demanded rises.

c. Explain the income and substitution effects as the price of mobile falls from 1983 to 2003. [4]

  • The income effect shows that as the price of mobile phones has fallen from 1983 to 2003, they have become more affordable for consumers as their price accounts for a smaller proportion of consumer income.
  • The substitution effect shows how the fall in the price of mobile phones makes then relatively less expensive compared to substitute goods such as land-line phones which makes mobile phones more attractive to buy.

d. Explain two reasons that might account for an increase in demand for mobile phones. [10]

Answers should include:

  • Definition of demand
  • Diagram to show an increase in demand for mobile phones from D to D1.
  • Explanation that the demand for mobile phones might have increased because of a fall in the price of complementary goods to mobile phones such as data and contract costs.
  • Explanation that the demand for mobile phones might have increased because mobile phones are a normal good and there is rising household incomes.
  • Explanation that the demand for mobile phones might have increased because the quality of the mobile phone has improved which makes phones more attractive to buyers.
  • Explanation that the demand for mobile phones might have increased because of changes in consumer tastes and preferences towards mobile phones which could have been affected by advertising and promotion.
  • Example of an increase in the demand for mobile phones such as the Apple IPhone.

Research into another consumer good where the price of the product has fallen overtime and ownership has increased.


Revision material

Each chapter in the textbook comes with downloadable revision notes that can be given to students to support their learning and be used for exam preparation. This link is an example of the revision material available.

Unit 1.1 revision material

Links to thinkib Economics

A very important aspect of this textbook is the way it makes links to all parts of the thinkib Economics site. For students and teachers, the links in the text will take you to relevant examination style questions, ideas for the internal assessment in Economics, Theory of Knowledge, different activities and the Extended Essay.

Full coverage of course content

Each aspect of the IB Standard and Higher Level Economics guide will be covered to the level prescribed by the guide in order to give students a comprehensive understanding of all the course material so they can achieve the highest possible grade in the final assessment examinations.

Key concepts

This book builds in the key concepts of the IB Economics course into its coverage. These concepts cover some of the fundamental questions students need to reflect on as they go through the material in the course, because they span so many of the different aspects of the course.

Each chapter in the textbook has an example of how one of the key concepts can be applied to material in the chapter.

The key concepts in the IB economics guide are:

  • Scarcity
  • Choice
  • Efficiency
  • Equity
  • Economic well-being
  • Sustainability
  • Change
  • Interdependence
  • Intervention
Example of the use of the key concept in the textbook

Thinking about a key concept - Sustainability

The theory of negative externalities can be closely related to sustainability. The Pacific Gas and Electric Company (PG&E) case example used in this chapter raises interesting questions about sustainability. In the case example, the company may have been looking to produce cheaper energy in the present by not considering the impact of their activities on the local environment in Hinkley, California. The long term consequences of the pollution produced by the plant would have had a devastating health effect on future generations if action was not taken to regulate them.

Do you think people are happy to pay more for their energy now if it means not negatively affecting future generations?

Chapter structure

Each chapter in this online textbook follows the same structure as the IB Economics guide and comprehensively covers each section of the syllabus.

The format of each chapter is set out as:

  • What you should have learned by the end of this chapter
  • Revision material
  • Contents of each chapter in the form of key economic terms, economic theory and concepts, graphical analysis, policy issues and evaluative arguments
  • Inquiry based case examples.

Selected Pages

Applying game theory 24 October 2021

The American economist John Nash is a central figure in the application of Game Theory in Economics. In 1994 he won the...

Foreign currency 18 October 2021

In March 2019 the Nigerian government banned access to foreign exchange for textile businesses. This put textile manufacturing...

Inequity 14 October 2021

textZambian born economist, Dambias Moyo started out with an undergraduate degree in Chemistry, and went on to do an MBA...

Economic development 14 October 2021

The political instability that comes with the forced takeover of a country like the situation in Afghanistan, has a ‘shock’...

Demerit goods 14 October 2021

Plenty of politicians have their eyes on the harmful consequences of online gaming. There are stories of gamers playing...

The price mechanism 12 October 2021

The world price of natural gas has increased from $2.50 per unit to $5.60 per unit over the last 12 months – an increase...

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