Anyone can score top marks in a 10 mark question.
But what stops people from doing well? What does a model answer look like?
Below I give a model answer for a 10 mark or part (a) question.
This is for IB Economics Paper 1 Higher Level (not paper 3, which needs a different structure).
For 24 model answers to 15 mark paper 1 questions, check out the links below:
On this website there is also a free sample model answer for a 15 mark question and more IB Economics HL tips.
To check these out, click the blue buttons below:
Key criteria
In a 10 mark question for paper 1, a top answer must:
- Answer the question
- Explain relevant economic theory (chains of analysis)
- Use relevant economic terms.
- Where relevant, include and explain diagrams.
Note no evaluation is required for this question. There is also no need for real world examples.
Question
Here is the question for the sample answer:
Explain the effects of a subsidy (10 marks)
I have kept the question simple. This is in order to focus on exam technique.
Essay plan
Here is a brief plan for our response:
- Subsidy definition.
- Graph including incidence of subsidy.
- Effects on producers – profits, investment, employment.
- Negative effects on producers – dependence and picking winners.
- Effects on government – opportunity cost and budget position.
I will cover subsidies through the market of solar panels. Here is an article discussing the example of a solar panel subsidy in Germany.
There is no requirement for real world examples in the 10 mark question in the syllabus. Here, your analysis is more important, though you can use an example market to guide you.
Sample answer
A subsidy is a government payment to a firm to encourage production of a particular good. I assume the subsidy is a per-unit subsidy – a fixed payment per unit the firm produces.
Suppose the government subsidises solar panels. The diagram shows the effect of a subsidy on the market for solar panels.
This leads to a shift right in the supply curve of solar energy from S to S1. This leads to a fall in price for solar energy from p to p1, and a rise in the quantity of solar energy used in equilibrium from q to q1. The area shaded in red shows the consumer incidence of the subsidy and the area shaded in blue shows the producer incidence. Given the demand for solar energy is likely to be price-elastic, as there are lots of substitutes, the firm is likely to receive the greater incidence from the subsidy compared to the consumer. That means that firms benefit more from the subsidy than the consumers.
Producers of solar panels benefit from the subsidy and see higher producer surplus. This means higher profits which is likely to mean higher reinvestment by firms. Also the quantity supplied has increased. As demand for labour is derived demand, it is likely that demand for workers will increase too. This leads to higher employment. Subsides may encourage firms to become dependent on the subsidy money to make a profit. This could reduce investment and innovation at the firm. If the subsidy were removed in the future, the firm may end up being less productive and fail.
Subsidies may also distort competition by ‘picking winners’. If only selected solar panel firms (or even selected industries) are subsidised, those firms (or industries) gain a cost advantage over other firms (or industries). Rather than letting firms compete in terms of price and non-price factors, subsidies could support failing firms, giving them a cost advantage over otherwise profitable firms, depending on how the subsidy is targeted.
The subsidy requires an increase in government spending. This comes with an opportunity cost, the next best alternative foregone when the government decides to spend more on subsides, which could be education or healthcare spending for example. If the government does not cut other spending or raise taxes, then subsidies increase the budget deficit. This means higher debt interest payments and a worse credit rating for the government using the subsidies.
Commentary
This answer meets all the criteria for a top level responses. Specifically it has the following:
- The response fully addresses the question.
- Relevant economic theory – incidence, subsidy diagram, chains of reasoning.
- Relevant economic terms – consumer and producer surplus, incidence, subsidy and opportunity cost.
- The answer includes and explains an appropriate diagram.
Hence this answer would score full marks or close to it.
Other possible points
Other possible points include:
- Correcting market failure where the subsidy corrects a negative externality, for example.
- Market power may influence the degree to which the subsidy is passed on to consumers. More generally factors that influence the burden of subsidises, such as the price elasticities of demand and supply.
- Effects on other related markets, for example the effects of subsidies on complements and substitutes.
- Effects on product quality.
- Welfare loss from subsidy itself.
- Other related issues.
Other questions
How much time should you spend on an IB Economics 10 mark question for paper 1?
For paper 1 there is one hour 15 minutes in total.
So, proportionally, you should spend 30 minutes on the 10 mark question.
However the 10 mark question is usually easier and less demanding than the 15 mark question.
So I recommend spending 20-25 minutes on the 10 mark question.
If you have more time, you can always come back to add more to the answer.
How many points should you make in an IB Economics 10 mark question for paper 1?
Typically I recommend four points. That is the case in the example above.
However the points above are relatively short. You could also go for two or three points but each with more detail.
The number of points here is not so important. What matters more is being able to explain economics well.
What are some common mistakes to avoid in 10 mark questions for IB Economics paper 1?
Key common mistakes to avoid are:
- Not answering the question.
- Errors in chains of analysis. You need to know your stuff!
- Adding unnecessary elements e.g. extensive evaluation.
- Overwriting. This means less time to write a solid answer to the 15 mark question.
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