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IB Economics

Unit 2: Microeconomics

The Ceteris modules for IB economics, Microeconomics, listed under each specification section. Each module teaches one idea, with questions through the page.

2.1 Demand

DemandTell demand from quantity demandedConcept · 6 min · FreeA shift in demandTell a shift in demand from a movement along the curveDiagram · 7 min

2.2 Supply

SupplyTell supply from quantity suppliedConcept · 6 minA shift in supplyTell a shift in supply from a movement along the curveDiagram · 8 min

2.3 Competitive market equilibrium

How a market finds its priceExplain how a market moves to its equilibrium priceHow it works · 6 minConsumer and producer surplusRead consumer and producer surplus off a diagramDiagram · 6 minWhat a price does: rationing, signalling, incentiveExplain the three jobs a price does in a marketHow it works · 6 min

2.4 Critique of the maximising behaviour of consumers and producers

Do people actually decide rationally?Weigh the case each way on the rational-choice assumptionDebate · 7 min

2.5 Elasticity of demand

Elastic and inelastic demandTell elastic demand from inelastic demandTell them apart · 6 minCalculating price elasticity of demandWork out a price elasticity of demand from two percentagesCalculation · 6 minIncome and cross elasticityTell a normal good from an inferior one, and a substitute from a complementTell them apart · 7 min

2.6 Elasticity of supply

Price elasticity of supplySay what makes a supply elastic or inelasticConcept · 7 min

2.7 Role of government in microeconomics

An indirect tax on a diagramShow what an indirect tax does to price and quantityDiagram · 7 minSubsidiesShow what a subsidy does to price and quantityDiagram · 7 minPrice ceilings and price floorsSay what a binding ceiling or floor does to a marketDiagram · 6 minGovernment failureSay what government failure is and name the forms it takesConcept · 7 minDoes a minimum wage cost jobs?Weigh the case each way on whether a minimum wage costs jobsDebate · 6 min

2.8 Market failure: externalities and common pool or common access resources

Negative externalitiesShow why a market over-produces when there is an external costDiagram · 8 minPositive externalitiesShow why a market under-produces when there is an external benefitDiagram · 7 minMerit and demerit goodsTell a merit good from a demerit good, and both from a public goodTell them apart · 7 minTradable pollution permitsWeigh permits against a tax as a way of cutting pollutionDebate · 6 min

2.9 Market failure: public goods

Public goodsTell a public good from a private oneConcept · 6 min · Free

2.10 Market failure: asymmetric information

Asymmetric informationSay what asymmetric information is and how it breaks a marketConcept · 6 min

2.11 Market failure: market power

Normal and supernormal profitTell normal profit from supernormal profitTell them apart · 6 minPerfect competitionSay what makes a market perfectly competitiveConcept · 7 minHow a monopoly formsName the barriers to entry that create a monopolyConcept · 7 minMonopolistic competition and oligopolyTell the four market structures apartTell them apart · 6 minIs competition policy worth it?Weigh the case each way on breaking up a large firmDebate · 6 min