YED=%ΔQd%ΔY(where Y=Income)YED equals the fraction with numerator % cap delta cap Q sub d and denominator % cap delta cap Y end-fraction space open paren where cap Y equals Income close paren : Normal good : Necessity (Income inelastic normal good) : Luxury (Income elastic normal good) : Inferior good Price Elasticity of Supply (PES) Formula:
Reverse the terms of trade formula in your notes. Write: ToT > 1 (or 100) means you are winning. If ToT falls, your export revenue falls.
For (HL):
When asked to calculate an area (like Deadweight Loss) and show it on a graph, use a ruler. Ensure your calculated intersections match your visual points perfectly.
No direct calculation usually required, but the repack must list:
IB questions often present a matrix of two countries and two commodities to test specialization.
Use a four-quadrant chart to visualize these relationships. Color-code each elasticity type and include real-world products for each category (e.g., airline tickets for elastic, insulin for inelastic). Review the formula variations used for calculating PED when given two price and quantity points:
: Formulas for Price Elasticity of Demand (PED), Income Elasticity (YED), and Cross-Price Elasticity (XED).
International trade, currency mechanics, and economic development calculations constitute the final module of the HL syllabus. International Trade and Protectionism
When government policy alters equilibrium, equations shift to calculate changes in welfare, revenue, and deadweight loss. Specific Indirect Tax (Imposition)
