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Understanding IB Economics command terms is vital for success, as they dictate the type of responses expected in your exams. Each term guides how you should approach the question. In this post, we’ll break down these key terms, giving you the tools needed to meet IB standards and excel in your exams!
IB Economics Command Terms
Analyse – Break down in order to bring out the essential elements or structure. For example, if you were asked to analyse the short-run and long-run effects of an increase in aggregate demand on output and price levels, you would need to explain how an increase in AD initially affects real output and price levels in the short run, considering factors like spare capacity. You would then explore the long-run impact, discussing potential inflationary pressures and the return to full employment output. Use relevant diagrams to illustrate your points clearly.
Apply – Use an idea, equation, principle, theory, or law in relation to a given problem or issue. For example, if you were asked to apply the law of demand to explain why the price of gasoline rises during a shortage, you would need to use the concept that as the quantity of gasoline available decreases, the price increases due to higher demand for the limited supply. You could also refer to supply and demand curves, showing how shifts in these curves affect equilibrium price and quantity in this specific situation.
Calculate – Obtain a numerical answer showing the relevant stages in the working. For instance, if you were asked to calculate the price elasticity of demand (PED) when given a percentage change in quantity demanded of 10% and a percentage change in price of 5%, you would use the formula: PED = percentage change in quantity demanded/percentage change in price, substituting the values: PED = 10%/5% = 2.
Comment – Give a judgment based on a given statement or result of a calculation. For example, if you were asked to comment on a calculated price elasticity of demand (PED) of 0.5, you would explain that this result indicates inelastic demand, meaning that a percentage change in price leads to a proportionally smaller change in quantity demanded. You could then provide a judgment, such as noting that inelastic demand suggests the good is a necessity or lacks close substitutes, which explains why consumers are less responsive to price changes.
Compare – Give an account of the similarities between two (or more) items or situations, referring to both (all) of them throughout. For example, if you were asked to compare perfect competition and monopolistic competition, you would highlight that both market structures feature a large number of firms and relatively easy entry and exit. You would also note that in both cases, firms aim to maximize profits in the short run and can earn normal profits in the long run.
Contrast – Give an account of the differences between two (or more) items or situations, referring to both (all) of them throughout. For instance, if you were asked to contrast monopoly and perfect competition, you would note that in a monopoly, there is a single firm that dominates the market, while in perfect competition, there are many firms competing. You could explain that a monopolist has significant control over pricing due to lack of competition, whereas firms in perfect competition are price takers with no market power. Additionally, you would mention that monopolies often produce less and charge higher prices compared to the efficient output levels and prices seen in perfect competition.
Compare and contrast – For this type of question, you would refer to both similarities and differences between the two (or more) items/situations.
Construct – Display information in a diagrammatic or logical form. FIf, for example, you were asked to construct a supply and demand diagram, you would draw a graph with price on the vertical axis and quantity on the horizontal axis. You would plot a downward-sloping demand curve to show that as price decreases, quantity demanded increases. Then, you would draw an upward-sloping supply curve to indicate that as price increases, quantity supplied increases. The intersection of the two curves represents the equilibrium price and quantity in the market.
Define – Give the precise meaning of a word, phrase, concept, or physical quantity. For example, if you were asked to define inflation, you would explain it as: "Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power, typically measured as an annual percentage change.
Derive – Manipulate a mathematical relationship to give a new equation or relationship. For example, if you were asked to derive marginal product (MP) from total product (TP), you would use the formula: MP = ΔTP / ΔL Where ΔTP is the change in total product and ΔL is the change in labor input. This formula shows that marginal product represents the additional output produced when one more unit of labor is added.
Describe – Give a detailed account. For instance, if you were asked to describe the law of demand, you would explain that it states that, all else being equal, as the price of a good or service decreases, the quantity demanded increases, and as the price increases, the quantity demanded decreases. You would also mention that this relationship is typically represented by a downward-sloping demand curve on a graph.
Determine – Obtain the only possible answer. For example, if you were asked to determine whether a market is operating under perfect competition or monopoly, you would assess the characteristics of the market. If the market has many buyers and sellers, identical products, and no barriers to entry, it can be determined to be a perfectly competitive market. Conversely, if there is only one seller, significant barriers to entry, and the ability to set prices, it is determined to be a monopoly.
Discuss – Offer a considered and balanced review that includes a range of arguments, factors, or hypotheses. Opinions or conclusions should be presented clearly and supported by appropriate evidence. For instance, if you were asked to discuss "the effects of a minimum wage on unemployment," you would need to explore both the potential benefits, such as reducing income inequality, and the possible drawbacks, such as increased unemployment among low-skilled workers. You would support your analysis with relevant economic theories, real-world examples, and data where applicable.
Distinguish – Make clear the differences between two or more concepts or items. For example, if you were asked to distinguish between microeconomics and macroeconomics, you would explain that microeconomics focuses on individual markets and the behavior of consumers and firms, analyzing decisions regarding supply and demand for specific goods. In contrast, macroeconomics looks at the economy as a whole, studying aggregate measures like national income, inflation, and unemployment.
Draw – Represent by means of a labelled, accurate diagram or graph, using a pencil. A ruler (straight edge) should be used for straight lines. Diagrams should be drawn to scale. Graphs should have points correctly plotted (if appropriate) and joined in a straight line or smooth curve. For example, if you were asked to draw a demand and supply graph, you would start by drawing two axes: the vertical axis for price and the horizontal axis for quantity. Then, you would accurately plot the downward-sloping demand curve and the upward-sloping supply curve. After labeling each curve, you would indicate the equilibrium price and quantity where the two curves intersect. This representation helps illustrate how the market reaches equilibrium.
Evaluate – Make an appraisal by weighing up the strengths and limitations. For example, if you were asked to evaluate the effectiveness of expansionary monetary policy in reducing unemployment, you would discuss its strengths, such as lowering interest rates to stimulate borrowing and investment, which can lead to job creation. You would also consider its limitations, like the potential for inflation or the time lag before the effects are felt in the economy.
Examine – Consider an argument or concept in a way that uncovers the assumptions and interrelationships of the issue. For example, if you were asked to examine the concept of free trade, you would explore the assumptions underlying it, such as the belief that markets are efficient and that all countries benefit from specialization. You would also discuss the interrelationships between free trade and factors like economic growth, income inequality, and environmental impacts.
Explain – Give a detailed account including reasons or causes. If, for example, you were asked to explain inflation, you would describe it as the general increase in prices of goods and services over time. You would discuss the main causes of inflation, such as demand-pull inflation (where demand exceeds supply), cost-push inflation (where production costs increase), and built-in inflation (where businesses and workers expect rising prices and wages, leading to a cycle of increasing costs). By providing these details, you clarify how inflation occurs and the factors that contribute to it.
Identify – Provide an answer from a number of possibilities. For instance, if you were asked to identify the types of market structures, you would list several options such as perfect competition, monopolistic competition, oligopoly, and monopoly.
Justify – Give valid reasons or evidence to support an answer or conclusion. For instance, if you were asked to justify the use of tariffs on imported goods, you could argue that tariffs protect domestic industries from foreign competition by making imported goods more expensive. You might provide evidence showing that the introduction of tariffs has led to increased production and job creation in domestic industries. Additionally, you could discuss how tariffs can generate government revenue and help improve the trade balance.
Label – Add labels to a diagram. For example, if you were asked to label a supply and demand diagram, you would include labels for the axes, marking the vertical axis as "Price" and the horizontal axis as "Quantity." You would also label the downward-sloping demand curve as "Demand" and the upward-sloping supply curve as "Supply." Additionally, you could label the point of intersection as "Equilibrium" and indicate the equilibrium price and quantity on the graph.
List – Give a sequence of brief answers with no explanation. For example, if you were asked to list the characteristics of different market structures, you would provide the following: perfect competition, monopolistic competition, oligopoly, and monopoly.
Measure – Obtain a value for a quantity. For example, if you were asked to measure unemployment, you would find the unemployment rate by taking the number of unemployed people and dividing it by the total labor force, then multiplying by 100. If there are 1,000 unemployed individuals in a labor force of 10,000, the unemployment rate would be 10 percent.
Outline – Give a brief account or summary. For example, if you were asked to outline the causes of inflation, you might summarize them as follows: Demand-pull inflation occurs when demand for goods and services exceeds supply. Cost-push inflation results from an increase in production costs, which leads to higher prices. Built-in inflation arises from the expectation of future inflation, causing wages and prices to increase. Lastly, monetary factors involve an increase in the money supply that can lead to higher prices.
Plot – Mark the position of points on a diagram. For instance, if you were asked to plot a demand curve, you would first set up a graph with price on the vertical axis and quantity on the horizontal axis. You would then identify specific price and quantity pairs based on the demand schedule. For instance, if at a price of 10 the quantity demanded is 100, you would mark the point (10, 100) on the graph. After plotting several points based on the demand schedule, you would connect them to form a downward-sloping demand curve, showing the relationship between price and quantity demanded.
Recommend – Present an advisable course of action with appropriate supporting evidence/reason in relation to a given situation, problem, or issue. For example, if you were asked to recommend a policy to reduce unemployment, you might suggest implementing a job training program. You would support this recommendation by providing evidence that job training can improve the skills of workers, making them more employable.
Show – Give the steps in a calculation or derivation. For example, if you were asked to show how to calculate total revenue for a firm, you would start by identifying the formula for total revenue, which is Total Revenue (TR) = Price (P) × Quantity (Q). Next, gather the necessary data: for example, if the price of the product is 20 and the quantity sold is 100. Then, substitute the values into the formula: TR = 20 × 100. Finally, calculate total revenue by multiplying the two values together, which gives you TR = 2,000.
Show that – Obtain the required result (possibly using information given) without the formality of proof. For example, if you were asked to show that the total cost (TC) is equal to fixed costs (FC) plus variable costs (VC), you would start by recalling the relationship: TC = FC + VC. If you know that fixed costs are 1,000 and variable costs are 500, you would substitute these values into the equation: TC = 1,000 + 500. Thus, you would show that TC equals 1,500.
Sketch – Represent by means of a diagram or graph (labelled as appropriate). The sketch should give a general idea of the required shape or relationship and should include relevant features. If, for example, you were asked to sketch a demand curve, you would draw a downward-sloping line from the left to the right of the graph, indicating that as price decreases, quantity demanded increases. You would label the vertical axis as "Price" and the horizontal axis as "Quantity." It's important to note that sketches are more general and do not need to be drawn to scale or with precise measurements. The focus is on illustrating the concept rather than creating an accurate representation.
Solve – Obtain the answer(s) using algebraic and/or numerical and/or graphical methods. For example, if you need to solve for the total cost (TC) when the fixed costs (FC) are 1,000 and variable costs (VC) are 500, you would use the formula TC equals FC plus VC. Substitute the values into the equation: TC equals 1,000 plus 500. By adding these together, you find that TC equals 1,500.
State – Give a specific name, value, or other brief answer without explanation or calculation. For instance, if you were asked to state the definition of GDP, you would simply respond with "Gross Domestic Product." If asked for a specific value, you might state, "The inflation rate is 3 percent."
Suggest – Propose a solution, hypothesis, or other possible answer. For example, if you were asked to suggest a policy to address high unemployment, you might propose implementing a public works program to create jobs through government-funded infrastructure projects. Alternatively, you could suggest enhancing vocational training programs to equip workers with the skills needed for in-demand jobs.
To what extent – Consider the merits or otherwise of an argument or concept. Opinions and conclusions should be presented clearly and supported with appropriate evidence and sound argument. For example, if you were asked to evaluate the extent to which minimum wage laws positively impact employment, you would begin by discussing the arguments in favor, such as improved living standards and increased consumer spending. Then, you would address the counterarguments, like potential job losses or increased costs for businesses. Finally, you would conclude by weighing these factors and providing evidence from studies or economic theories to support your opinion, clearly stating your overall assessment of the impact of minimum wage laws on employment.
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