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Economics for the IB Diploma by Ellie Tragakes: A Book that Provides Students with a Solid Foundation in Economic Concepts, Theories, Models, and Applications



Economics for the IB Diploma by Ellie Tragakes: A Review




If you are looking for a comprehensive and accessible textbook for the IB Economics course, you might want to consider Economics for the IB Diploma by Ellie Tragakes. This book covers all the topics in the syllabus, as well as providing exam-style questions, case studies, glossary terms, and online resources. In this article, we will review the main features of this book and how it can help you prepare for your IB Economics exams.




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Introduction




What is Economics for the IB Diploma?




Economics for the IB Diploma is a textbook written by Ellie Tragakes, a former IB Economics teacher and examiner. It is published by Cambridge University Press and follows the latest IB Economics syllabus. The book is divided into five parts: Introduction to Economics, Microeconomics, Macroeconomics, International Economics, and Economic Development. Each part contains several chapters that explain the key concepts, theories, models, and applications of economics in a clear and engaging way. The book also includes diagrams, graphs, tables, examples, exercises, summaries, review questions, exam-style questions, case studies, glossary terms, and online resources.


Who is Ellie Tragakes?




Ellie Tragakes is a Greek-American economist who has taught IB Economics at various international schools around the world. She has also been an IB Economics examiner, moderator, workshop leader, curriculum developer, and author. She holds a PhD in Economics from Columbia University and has published several books and articles on economics education. She is currently a professor of economics at Neapolis University Pafos in Cyprus.


What are the main features of the book?




Some of the main features of Economics for the IB Diploma are:


  • It covers all the topics in the IB Economics syllabus, both at standard level (SL) and higher level (HL).



  • It provides clear explanations of economic concepts, theories, models, and applications with relevant examples from real-world situations.



  • It uses diagrams, graphs, tables, examples, exercises, summaries, review questions, exam-style questions, case studies, glossary terms, and online resources to enhance learning and understanding.



  • It offers guidance on how to approach different types of questions in the IB Economics exams, such as multiple-choice questions (MCQs), data response questions (DRQs), extended response questions (ERQs), paper 1 questions, paper 2 questions, and paper 3 questions (for HL students).



  • It provides access to online resources, such as interactive quizzes, additional case studies, data sets, worksheets, and answers to selected questions.



Part 1: Introduction to Economics




Fundamental concepts in Economics




Scarcity, choice and opportunity cost




The first chapter of the book introduces the fundamental concepts of economics, such as scarcity, choice and opportunity cost. Scarcity means that there are limited resources to satisfy unlimited wants. Choice means that people have to make decisions about how to use their scarce resources. Opportunity cost means that every choice involves a trade-off or a sacrifice of the next best alternative. For example, if you choose to spend your money on a pizza, the opportunity cost is the burger that you could have bought instead. The concept of opportunity cost is illustrated by the production possibility frontier (PPF), which shows the maximum combinations of two goods or services that can be produced with a given amount of resources and technology.


Positive and normative statements




The second chapter of the book explains the difference between positive and normative statements in economics. Positive statements are statements that can be tested or verified by facts or evidence. They describe what is or what will be. For example, "The unemployment rate in Greece is 15%." Normative statements are statements that express opinions or value judgments. They prescribe what ought to be or what should be. For example, "The government should reduce the unemployment rate in Greece." The distinction between positive and normative statements is important because it helps us to separate facts from opinions and to evaluate arguments and policies.


The economic problem




The third chapter of the book discusses the economic problem, which is how to allocate scarce resources among competing ends. The economic problem arises because people have unlimited wants but limited resources. Therefore, they have to make choices about what to produce, how to produce, and for whom to produce. The book introduces three types of economic systems that attempt to solve the economic problem: market economy, planned economy, and mixed economy. A market economy is an economy where resources are allocated by the forces of demand and supply. A planned economy is an economy where resources are allocated by the government or a central authority. A mixed economy is an economy where resources are allocated by a combination of market forces and government intervention.


Part 2: Microeconomics




Markets




Demand and supply




The fourth chapter of the book explains the concepts of demand and supply, which are the key determinants of market prices and quantities. Demand is the quantity of a good or service that consumers are willing and able to buy at different prices in a given period of time. Supply is the quantity of a good or service that producers are willing and able to sell at different prices in a given period of time. The book shows how demand and supply curves can be drawn and how they can shift due to changes in various factors, such as income, preferences, prices of related goods, costs of production, technology, taxes, subsidies, etc.


Market equilibrium and disequilibrium




The fifth chapter of the book analyzes the concept of market equilibrium and disequilibrium. Market equilibrium is a situation where demand equals supply at a certain price and quantity. At this point, there is no tendency for the price or quantity to change. Market disequilibrium is a situation where demand does not equal supply at a certain price and quantity. This creates either excess demand or excess supply, which leads to pressure for the price or quantity to change until equilibrium is restored. The book illustrates how market equilibrium and disequilibrium can be represented graphically and algebraically.


Consumer and producer surplus




The sixth chapter of the book introduces the concept of consumer and producer surplus, which measure the benefits that consumers and producers gain from participating in a market. Consumer surplus is the difference between the maximum price that consumers are willing to pay for a good or service and the actual price they pay. Producer surplus is the difference between the minimum price that producers are willing to accept for a good or service and the actual price they receive. The book shows how consumer and producer surplus can be calculated and represented graphically using demand and supply curves.


Elasticities




Price elasticity of demand




Price elasticity of supply




The eighth chapter of the book explains the concept of price elasticity of supply, which measures how responsive supply is to changes in price. Price elasticity of supply is calculated by dividing the percentage change in quantity supplied by the percentage change in price. The book shows how price elasticity of supply can be classified into five categories: perfectly elastic, elastic, unit elastic, inelastic, and perfectly inelastic. A perfectly elastic supply is one where a change in price leads to an infinite change in quantity supplied. A perfectly inelastic supply is one where a change in price has no effect on quantity supplied. An elastic supply is one where a change in price leads to a greater than proportional change in quantity supplied. An inelastic supply is one where a change in price leads to a smaller than proportional change in quantity supplied. A unit elastic supply is one where a change in price leads to an equal proportional change in quantity supplied.


Factors affecting price elasticity of supply




The ninth chapter of the book discusses the factors that affect the price elasticity of supply, such as time, availability of resources, spare capacity, mobility of factors of production, and storage costs. The book explains how these factors influence the responsiveness of supply to price changes. For example, supply tends to be more elastic in the long run than in the short run, because producers have more time to adjust their production decisions and use their resources more efficiently. Supply also tends to be more elastic when there are more available resources, more spare capacity, more mobility of factors of production, and lower storage costs.


Applications of price elasticity of supply




The tenth chapter of the book applies the concept of price elasticity of supply to various situations and issues, such as taxation, subsidies, minimum wage, market intervention, and international trade. The book shows how the elasticity of supply affects the outcomes and impacts of these policies and events. For example, when the government imposes a tax on a good or service, the burden of the tax depends on the relative elasticities of demand and supply. If supply is more elastic than demand, producers can pass on more of the tax to consumers by raising their prices. If demand is more elastic than supply, consumers can avoid more of the tax by reducing their purchases.


The theory of the firm I




Costs, revenues and profit




The eleventh chapter of the book introduces the theory of the firm, which explains how firms make decisions about production and pricing. The first part of this theory focuses on the costs, revenues and profit of firms. Costs are the expenses that firms incur when they produce goods or services. Revenues are the income that firms receive when they sell goods or services. Profit is the difference between revenues and costs. The book distinguishes between different types of costs, such as fixed costs, variable costs, total costs, average costs, and marginal costs. It also distinguishes between different types of revenues, such as total revenue, average revenue, and marginal revenue. It shows how these concepts can be calculated and represented graphically using cost curves and revenue curves.


Economies and diseconomies of scale




Economies and diseconomies of scale




The thirteenth chapter of the book explains the concept of economies and diseconomies of scale, which refer to how the average cost of production changes as output increases. Economies of scale are the cost advantages that a firm can achieve by expanding its production in the long run. Diseconomies of scale are the cost disadvantages that a firm can face by expanding its production too much in the long run. The book distinguishes between two types of economies and diseconomies of scale: internal and external. Internal economies and diseconomies of scale are the ones that arise from the growth of the firm itself. External economies and diseconomies of scale are the ones that arise from factors outside the firm, such as the industry or the environment.


Internal economies and diseconomies of scale




The fourteenth chapter of the book discusses the internal economies and diseconomies of scale, which are related to the technical, organizational, or managerial aspects of production within a firm. The book identifies several sources of internal economies and diseconomies of scale, such as:


  • Technical economies and diseconomies: These result from the use of more efficient or less efficient machinery, equipment, technology, or methods of production as output increases.



  • Organizational economies and diseconomies: These result from the improvement or deterioration of coordination, communication, supervision, or administration within a firm as output increases.



  • Managerial economies and diseconomies: These result from the specialization or generalization of management functions, such as planning, organizing, directing, or controlling, as output increases.



  • Financial economies and diseconomies: These result from the access to cheaper or more expensive sources of finance, such as loans, bonds, shares, or retained earnings, as output increases.



  • Marketing economies and diseconomies: These result from the reduction or increase in average marketing costs, such as advertising, promotion, distribution, or research, as output increases.



  • Risk-bearing economies and diseconomies: These result from the diversification or concentration of products or markets, which reduces or increases the exposure to uncertainty and fluctuations in demand or supply.



External economies and diseconomies of scale




The fifteenth chapter of the book analyzes the external economies and diseconomies of scale, which are related to the conditions or factors in the industry or the environment that affect a firm's production costs. The book identifies several sources of external economies and diseconomies of scale, such as:


  • External technical economies and diseconomies: These result from the availability or scarcity of infrastructure, such as roads, railways, ports, power supply, water supply, or telecommunications, that facilitate or hinder production.



  • External organizational economies and diseconomies: These result from the existence or absence of institutions, such as trade associations, chambers of commerce, regulatory bodies, or standardization agencies, that support or constrain production.



  • External managerial economies and diseconomies: These result from the availability or shortage of skilled managers, consultants, advisers, trainers, or educators in the industry or region that enhance or limit production.



The theory of the firm II




Market structures




The sixteenth chapter of the book introduces the concept of market structures, which refer to the characteristics and features of a market that affect the behavior and performance of firms. The book identifies four main types of market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. The book compares and contrasts these market structures based on several criteria, such as the number and size of firms, the degree of product differentiation, the ease of entry and exit, the level of information and knowledge, the degree of market power, and the type of pricing and output decisions.


Perfect competition and monopoly




The seventeenth chapter of the book analyzes the two extreme cases of market structures: perfect competition and monopoly. Perfect competition is a market structure where there are many small firms selling identical products, facing no barriers to entry or exit, and having no market power. Monopoly is a market structure where there is only one large firm selling a unique product, facing high barriers to entry or exit, and having complete market power. The book shows how these market structures affect the efficiency and equity outcomes in terms of allocative efficiency, productive efficiency, dynamic efficiency, consumer surplus, producer surplus, social surplus, deadweight loss, and profit.


Monopolistic competition and oligopoly




The eighteenth chapter of the book examines the two intermediate cases of market structures: monopolistic competition and oligopoly. Monopolistic competition is a market structure where there are many small firms selling slightly differentiated products, facing low barriers to entry or exit, and having some market power. Oligopoly is a market structure where there are few large firms selling either homogeneous or differentiated products, facing high barriers to entry or exit, and having significant market power. The book shows how these market structures affect the behavior and performance of firms in terms of pricing strategies, output decisions, product variety, advertising, innovation, collusion, cooperation, competition, game theory, Nash equilibrium, dominant strategy, prisoner's dilemma, kinked demand curve, price leadership, price discrimination, etc.


Market failure




Externalities and public goods




Common access resources and sustainability




The twentieth chapter of the book discusses the concept of common access resources and sustainability, which are related to the management and conservation of natural resources that are non-excludable but rivalrous in consumption. Common access resources are natural resources that anyone can use without paying a fee or obtaining a permit, such as forests, pastures, fisheries, oil and gas fields, national parks, grazing lands, and irrigation systems. The book shows how common access resources can lead to market failure by creating a tragedy of the commons, which occurs when individuals with access to a public resource act in their own interest and overexploit the resource, resulting in its depletion or degradation. The book also discusses possible solutions to prevent or mitigate the tragedy of the commons, such as property rights, quotas, licenses, fees, taxes, subsidies, co-management, community-based management, and international cooperation.


Sustainability and intergenerational equity




The twenty-first chapter of the book explains the concept of sustainability and intergenerational equity, which are related to the long-term implications of resource use and environmental degradation for future generations. Sustainability is the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. Intergenerational equity is the principle that each generation should leave behind a stock of natural resources and environmental quality that is at least as good as what they inherited from previous generations. The book shows how sustainability and intergenerational equity can be measured and evaluated using various indicators and criteria, such as natural capital, environmental accounting, green GDP, ecological footprint, environmental Kuznets curve, weak sustainability, strong sustainability, safe minimum standard, precautionary principle, etc.


Conclusion




In conclusion, this article has reviewed the main features and contents of Economics for the IB Diploma by Ellie Tragakes. This book is a comprehensive and accessible textbook for the IB Economics course that covers all the topics in the syllabus with clarity and rigor. The book provides students with a solid foundation in economic concepts, theories, models, and applications with relevant examples and exercises. The book also helps students prepare for their IB Economics exams with guidance on exam techniques and practice questions. The book is accompanied by online resources that offer additional support and enrichment for students and teachers. The book is highly recommended for anyone who wants to learn more about economics and its role in understanding and addressing real-world issues.


FAQs




  • What are some of the benefits of studying economics?



Some of the benefits of studying economics are:


  • It helps you develop critical thinking and analytical skills that can be applied to various problems and situations.



  • It helps you understand how individuals, firms, markets, governments, and societies make decisions and interact with each other.



It helps you evaluate different policies


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