The IBDP Economics programme
Introduction to the course
Starter activity
• youtube.com/watch?v=B5gv4bka5Qg
Understanding the nature of
economics
Lesson objectives
Define the keys terms associated with economics(AO1)
Explain the social nature of economics(AO2)
Distinguish between microeconomics and macroeconomics(AO2)
Explain the nine central concepts that run through your course in
economics(AO2)
Explain the meaning of scarcity(AO2)
Identify and explain the four factors of production(AO2)
Explain the meaning of opportunity cost in relation to choice and free
goods(AO2)
Economics as a social science
• The social sciences are academic disciplines that study human
society and social relationships. They are concerned with
discovering general principles describing how societies
function and are organised. The social sciences include
anthropology, economics, political science, psychology,
sociology and others.
• Economics is a social science because it deals with human
society and behaviour, and particularly those aspects
concerned with how people organise their activities and how
they behave to satisfy their needs and wants.
• It is a social science because its approach to studying human
society is based on a scientific method.
Microeconomics and macroeconomics
• The micro level, called microeconomics, examines the behaviour of
individual decision-making units in the economy. The two main groups of
decision-makers we study are consumers (or households) and firms (or
businesses). Microeconomics is concerned with how these decision
makers behave, how they make choices, what are the consequences of
their decisions and how their interactions in markets determine prices.
• The macro level, called macroeconomics, examines the economy as a
whole to obtain a broad or overall picture of the economy.
Macroeconomics uses aggregates, which are wholes or collections of
many individual units, such as the sum of consumer behaviours and the
sum of firm behaviours, and total income and output of the entire
economy, as well as total employment and the overall price level.
Introduction
Nature of the subject
Introduction
Key concepts
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Scarcity
Choice
Efficiency
Economic wellbeing
Equity
Sustainability
Change
Intervention
Interdependence
WISE CHOICES
Key concepts of the course
Scarcity
• One of the most important concepts in economics, scarcity, refers to the
idea that resources are insufficient to satisfy unlimited human needs and
wants.
• In fact, it is said that if there were no scarcity, there would be no social
science of economics. This is because economics is the study of how our
scarce or limited resources can best be used in order to satisfy the
unlimited needs and wants of human beings.
Choice
• Since resources are scarce, it is not possible for all human needs and
wants to be satisfied. This means that choices must be made about what
will be produced and what will be foregone (not produced and therefore
sacrificed). Economics studies how different decision-makers make choices
between competing alternative options, and analyses the present and
future consequences of their choices.
Key concepts of the course
Efficiency
Efficiency refers to making the best possible use of scarce resources to avoid
resource waste.
In view of the scarcity of resources, it is important to use these in ways that
ensure they are not wasted.
In part, efficiency means using the fewest possible resources to produce
goods and services.
But, in addition, it requires that scarce resources are used to produce the
goods and services that mostly satisfy society’s needs and wants. This is
known as allocative efficiency used as a benchmark or standard to determine
the appropriateness of economic actions from the point of view of minimising
resource waste.
Key concepts of the course
Equity
• Equity is the idea of being fair or just.
• Equity is not the same as equality, which is the sameness of treatment or
outcomes for people or groups of people in a society.
• Fairness is a normative concept (to be discussed later) because ideas of
what is fair vary according to beliefs, value judgements and ideologies.
• In economics, the ideas of equity and inequity are usually identified with
equality and inequality, and are used mostly in connection with equality in
the distribution of income, wealth and human opportunity.
• In all economic systems, these kinds of inequities or inequalities are
present both within and between societies, and are significant issues, as
many people cannot meet their basic needs and lack opportunities. There
is much debate among economists on how much and what types of
government intervention in markets are appropriate in order to address
these issues effectively.
Key concepts of the course
Economic wellbeing
Economic wellbeing is a concept that has several different dimensions. It
refers to levels of prosperity, economic satisfaction and standards of living
among the members of a society.
Economic well-being includes:
• security with respect to income and wealth, having a job and housing
• the ability to pursue one’s goals, work productively and develop one’s
potential
• the ability to have a satisfactory quality of life, which includes numerous
factors such as health, education, social connections, environmental
quality, personal security the ability to maintain all of the above over time.
There are very significant variations in levels of economic well-being both
within nations and between nations
Key concepts of the course
Sustainability
refers to the long-term maintenance or viability of a particular activity or policy.
In economics, it is most commonly used to refer to the ability of the present
generation to satisfy its needs by the use of resources, and especially nonrenewable resources, without limiting future generation’s ability to satisfy their
own needs.
The problem arises because the present generation at any moment in time
engages in many economic activities of production and consumption that too
often destroy or degrade (lower the quality of) the environment and nonrenewable resources. The result of such activities is that future generations will be
penalised.
Therefore the issue is how to develop methods of production and patterns of
consumption that will not result in such environmental and resource destruction
and degradation
Key concepts of the course
Change
This idea of change is very important in economics, where much of what we
study is in a continuous state of change.
In economics, we can distinguish between the idea of change: (i) in economic
theory and (ii) in real-world events.
In economic theory, economists very often study change between one
situation and another situation that has been caused by a change in one or
more variables.
It is important to bear this in mind in our study of economics as you will often
be asked to analyse and evaluate this kind of change in a large variety of
contexts.
Regarding the study of real-world phenomena, the world is characterised by
continuous change in the institutional, technological, social, political and
cultural environments in which economic events occur.
Key concepts of the course
Interdependence
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Interdependence refers to the idea that economic decision-makers interact with
and depend on each other. Such interdependence occurs on all levels, from
individuals, to communities, to nations and to groups of nations.
Interdependence arises from the fact that no one is self-sufficient, requiring ever
increasing degrees of interactions and interdependence.
Consumers, workers, firms, governments and all other individuals or groups of
individuals depend on one another for the achievement of their economic goals.
With increasing globalisation (which refers to the interactions and integration of
economies worldwide), interdependence increases.
In a highly interdependent world, events in one part give rise to many and possibly
unintended consequences in other parts, with outcomes that cannot always be
predicted or discovered by looking at the constituent parts in isolation. Economists
must therefore take into consideration both intended and unintended
consequences of economic decisions and events when there is a high degree of
interdependence.
Key concepts of the course
Intervention
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In economics, intervention typically refers to government intervention, meaning
that the government becomes involved with the workings of markets.
While markets offer numerous advantages as a way to achieve important
economic objectives,
It is generally recognised that markets on their own often cannot achieve
important societal goals, such as the goals of equity, sustainability, economic wellbeing or efficiency.
When this occurs, whether at the micro or macro levels, there may be good reason
for the government to intervene in order to correct for the market’s deficiencies.
However, economists and policy-makers often disagree widely on the need for,
degree and method of intervention that is necessary.
A key debate that you will repeatedly encounter in your studies of economics
involves the advantages and disadvantages of free markets versus government
intervention.
The fundamental. Problem of
economics: scarcity and choice
The problem of scarcity
Human beings have very many needs and wants.
The study of economics arises because people’s
needs and wants are unlimited/infinite while the
goods and services/resources/inputs/factors of
production needed to satisfy them are limited in
nature.
Why scarcity forces choices to be
made
• Since people cannot have everything, they
must make choices
• Resource scarcity forces economic agents to
make choices amongst competing alternatives
We can therefore say that economics is a study
of choices.
• Because of scarcity of resources, it is
important to use resources efficiently to avoid
wastage.
Test your understanding activity(Think,
pair and share)
• Think of some of your most important needs and
wants, and then explain whether these are
satisfied by goods or by services
• Outline why economics is a study of choices.
Describe its relationship to scarcity. Outline how
scarcity is related to the need to avoid waste in
the use of resources.
• Explain why diamonds are far more expensive
than water, even though diamonds are a luxury
while water ios a necessity which we cannot live
with.
Scarcity and sustainability
Lesson objectives
• Introduction
• Syllabus
• Assessment
Conceptual understandings
• Economics is a social science in which there is interdependence between
people who interact with each over how to improve their economic wellbeing, and who are influenced and empowered by their values and natural
sorroundings
• The Economic world is dynamic and subject to continous change
• Economic decision-making is central to determining the relative economic
well-being of individuals and societies
• The key problem of economics derives from scarcity, which necessitates
choice. This in turn leads all economies to confront trade-offs,
opportunity costs and the challenge of sustainability.
• Unlimited economic growth based on the use of finite resources cannot
continue indefinitely.
The foundation of economics
Before we start.
Research task
What do you think the subject is about?
Sciences like physics, biology and chemistry are examples
of natural sciences
Anthropology, psychology and economics are examples of
social sciences.
In what ways do you think natural and social sciences are
similar and in what ways are they different?
What do you think the purpose of government should be
in society?
Introduction:
The fundamental economic question
• The fundamental economic question is
scarcity
• Activity(bridge of sighs)
• Question: What lessons do you draw from the
activity?
Introduction
Implications of scarcity
As a result of this scarcity, choices have to be
made.
The economics course, at both SL and HL, uses
economic theories to examine the ways in which
these choices are made:
• Microeconomics
• Macroeconomics
• The global economy.
Introduction
Real world issues
The choices made by economic agents (consumers, producers and governments)
generate positive and negative outcomes and these outcomes affect the relative wellbeing of individuals and societies and hence raises the following real world issues and
questions
• How do consumers and producers make choices in trying to meet their economic
objectives?
• When are markets unable to satisfy important economic objectives—and does
government intervention help?
• Why does economic activity vary over time and why does this matter?
• How do governments manage their economy and how effective are their policies?
• Who are the winners and losers of the integration of the world’s economies?
• Why is economic development uneven?
Introduction
Assessment objectives
1. Knowledge and understanding (AO1)
• Demonstrate knowledge and understanding of specified content • Demonstrate knowledge and
understanding of the common SL/HL syllabus • Demonstrate knowledge and understanding of current
economic issues and data • At HL only: demonstrate knowledge and understanding of the extension
topics
2. Application and analysis (AO2) • Apply economic concepts and theories to real-world situations •
Identify and interpret economic data • Analyse how economic information is used effectively in
particular contexts • In the internal assessment task: explain the link between key economic concepts
and economic commentaries • At HL only: demonstrate application and analysis of the extension topics
3. Synthesis and evaluation (AO3) • Examine economic concepts and theories • Use economic concepts
and examples to construct and present an argument • Discuss and evaluate economic information and
theories • At HL only: demonstrate economic synthesis and evaluation of the extension topics select
and use economic data using economic theory to make policy recommendations.
4. Use and application of appropriate skills (AO4) • Produce well-structured written material, using
appropriate economic theory, concepts and terminology • Produce and use diagrams to help explain
economic theory, concepts and real-world issues • Select, interpret and analyse appropriate extracts
from the news media • Interpret appropriate data sets • Use quantitative techniques to identify, explain
and analyse economic relationshi
Internal assessment
Portfolio Duration: 20 hours
Weighting: 30% (SL), 20% (HL)
Rationale: Internal assessment in economics enables students to
demonstrate the application of their knowledge and understanding of
economic theory in relation to real-world situations.
Requirements
• Both SL and HL economics students produce a portfolio of three
commentaries based on articles from published news media.
• Each article must be based on a different unit of the syllabus
(excluding Unit 1: Introduction to economics): Unit 2:
Microeconomics, Unit 3: Macroeconomics and Unit 4: The global
economy.
Internal assessment
Articles
Sources:
Newspapers, journals or the internet, but must not be from television or radio broadcasts.
If a student includes a relatively lengthy article, which is discouraged, the student must highlight the
section(s) of the article upon which the commentary is based.
Validity:
Articles used must have been published no earlier than one year before the writing of the commentary.
Language used:
The article on which the commentary is based should, where possible, be in the same language as the
commentary. If an extract in another language is used, the student must provide an accurate translation
of the whole article. Students must also include the original article in their portfolio.
Individual work
Students must select their own articles to discuss. It may happen that more than one student bases his
or her commentary on the same article, but the article must not be given to the class by the teacher,
and the production of the commentary must be each student’s individual work. A commentary must not
be prepared collaboratively.
Application and use of Key concepts
Each of the three commentaries must use a different key concept as a lens through which to analyse
the published extracts. Students will risk losing 3 marks in criterion D if they use the same key concept
in two commentaries and up to 6 marks if the same key concept is used in three commentaries.
The economics classroom is a good starting point for economics news articles
Internal Assessment
Focus
Each commentary must:
• explain the links between the article, a key
concept and economic theory taken from the unit
of the syllabus on which the article is based
• demonstrate economic insights into the
implications of the article (that is, it should
provide evidence of the student’s ability to
discuss current events from the point of view of
an economist).
Internal assessment
Focus
On each commentary students must record:
• the title of the article
• the source of the article (including date of access
to the site if from the internet)
• the date the article was published
• the date the commentary was written
• the word count of the commentary
• the unit of the syllabus to which the article
relates
• the key concept being used
Internal assessment criteria
Criterion
Commentary section
Marks
Criterion A
Diagrams
3 marks
Criterion B
Terminology
2 marks
Criterion C
Application and analysis
3 marks
Criterion D
Key concept
3 marks
Criterion E
Evaluation
3 marks
Total
14 marks
There is one internal assessment criterion for the whole portfolio.
Criterion F
Rubric requirements
3 marks
The maximum for the portfolio is
45 marks:
(14 marks x 3 commentaries)
+ 3 marks = 42 + 3 marks.
Internal assessment
Assessment criteria
The assessment criteria are related to the assessment objectives.
• Criterion A: AO2 and AO4(assesses the extent to which the student is able
to construct and explain diagrams).
• Criterion B: AO1(assesses the extent to which the student uses
appropriate economic terminology).
• Criterion C: AO2(assesses the extent to which the student recognizes,
understands, applies and analyses economic theory in the context of the
article).
• Criterion D: AO2(assesses the extent to which the student recognizes,
understands and links a key concept to the article).
• Criterion E: AO3(assesses the extent to which the student’s judgments are
supported by reasoned argument).
• Criterion F: AO4(assesses the extent to which the student meets the three
rubric requirements for the complete portfolio)
Golden tips for writing a good IA
Getting started
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Use the ‘economics classroom’ for researching on good articles
Copy and paste the article onto google doc
Read the article keenly and understand it while highlighting and annotating
alongside it before you start the commentary
Writing the outline
• Should have an introduction, characteristics, definitions
• Analysis(cause, effects, implications) and application, diagrams
• Include data, evidence from the article(3 times where possible) quoted verbatim
• Evaluation-make comparisons across the different aspects of the article pointing
out problem areas and give solutions, all the while quoting evidence to support
your claims. Are there opportunities for drawing graphs and explaining them?
• Lastly, as part of the evaluation, think about the conclusion(CLASP), Conclusions,
Long/short-term impact, assumptions of the theory, stakeholders, and pros/cons.
The IA-writing your first draft
• Start off with writing down the definitions and the main
background of the economic issue in question
• Follow that up with the analysis and evaluation, including well
explained, labeled and titled graphs
• Finish this up on Monday