Brad Cartwright

IB Economics - 

Teach it Through the Diagrams

September 13, 2024

This week we’re going to take a deep look at the most effective strategy to deliver content in IB Economics, why it’s so important, and how to do it effectively.

As a teacher of IB Economics, you know that there are many different avenues to teaching this course. 

But over the years, I have realized that The Diagrams and teaching them strategically is the most impactful path to content mastery for students. 

Furthermore, I have seen that a thorough understanding of how the diagrams function or behave is the key component to students constructing effective analyses and evaluations.

But first, let’s remind ourselves….

The Five Essential Skills of IB Economics:

1. The Language
2. The Calculations
3. The Diagrams
4. The Analysis
5. The Evaluation

These are the five most important skills every IB Economics student must hone.  But what’s the one that unlocks the rest?  

The Diagrams. 

So how are we going to do that?

I’ll walk through the details in a second, but here’s what you need to remember…

Teach Base Diagrams. Then Teach Events. 

Teach Base Diagrams. Then Teach Events.

That’s it. 

Why?

Because this creates a thought-pattern that constructs a process that begins to cut a path in students’ brains from the status quo to the change. 

Think of this way...

The status quo is The Base Diagram. 

The Event is the indirect tax or per-unit subsidy or contractionary fiscal policy or protectionist tariff. 

Got that? 

Base Diagram = Status Quo 

Event = New Government Policy. 

New Government Policy = Outcome

So you could put it this way:  Base Diagram + Event = Outcome

That Outcome is what students analyze in The Analysis. 

Then, the Evaluation is the judgment of that Outcome analyzed in the Analysis. 

It’s so powerful. 

It is so, so, so helpful to keep that skill progression in your mind.

Yeah, ok great. But how are we going to do that?

First, check this out…

Of the almost ninety diagrams taught in IB Economics, nearly all of them are born of these seven Base Diagrams:

Microeconomics – Base Diagrams 

• Demand & Supply Diagram – “Rule of 11” 
• Market Failure Base Diagram – it’s just a renamed “Rule of 11”

Market Power – Base Diagrams 

• Price Taker’s Profit Diagram
• Price Maker’s Profit Diagram

Macroeconomics – Base Diagrams

• Neoclassical Aggregate Demand & Aggregate Supply Diagram - “Rule of 10”
• Keynesian Aggregate Demand & Aggregate Supply Diagram - “Rule of 9”

The Global Economy: International Economics – Base Diagram

• The Free Trade Diagram

Now let’s take a look at each of these, one section of the syllabus at a time.

 

Microeconomics 

Here is a look at the Base Diagram of Microeconomics. 

It’s the simple demand and supply diagram. I call it the “Rule of 11” because if you count the compulsory elements of the diagram, there are eleven of them. 

Pretty fancy.

Now, if you think about the Events in the Government Intervention section of Microeconomics, there are four possible events: the Indirect Tax, the Per-Unit Subsidy, the Price Ceiling, and the Price Floor. 

Well, take a look.  

This Base Diagram is “underneath” each of those four diagrams. 

The Event simply adds one line to each diagram. 

 

 

 

Four diagrams, born of one. 

 Of course, a lot happens as a result of The Event. Sure. 

But we are talking about diagram perfection here. 

The change from the status quo is what they write about in their analysis.

Now let’s take a look at Market Failure. 

Check this out…

The Market Failure Base Diagram is simply the Demand and Supply Base Diagram with the curves renamed:

So there it is….  

The Market Failure Base Diagram for all four externality diagrams:

From this Base Diagram, students can easily construct the four Market Failure Externality Diagrams by shifting the appropriate “one line”: 

• Negative Externality of Consumption  =>  Outward Shift of the MPB
• Positive Externality of Consumption  =>  Inward Shift of MPB
• Negative Externality of Production  =>  Outward Shift of MPC
• Positive Externality of Production  =>  Inward Shift of MPC 

Try it. 

Draw the Market Failure Base Diagram and then you realize that for each externality diagram, you just shift one line.

Remember the ol’ adage: 

• Bad things are overproduced (demerit goods)
• Good things are Underproduced (merit goods). 

With this in mind, both negative externalities will always have Q values greater than Q1.  

And both positive externalities will have Q values less than Q1.

If you’re confused by that, don’t worry, these are the most confusing four diagrams of the two years. 

Just take it slowly. You’ll see the pattern emerge. 

Sharing this pattern with students will provide untold quantities of clarity.  And it’s all built from mastery of the Market Failure Base Diagram.  

Market Power

Now let’s take a look at the profit diagrams for Market Power.  

Remember that there are two basic types of Market Structures:

• The Price “Takers” – Which is Perfect Competition
• The Price “Makers” – Which is Monopoly, Oligopoly, and Monopolistic Competition

The Price Takers Base Diagram 

You will see that all three profit diagrams are born of the same simple Price Takers Base Diagram. 

Then, all the student needs to do, is figure out where the Average Cost (AC) curve should be drawn based on the profit level the IB is asking for.

Take a look:

 Kinda cool, right?

The “Price Makers” Base Diagram 

Check it out. Same thing. 

One Base Diagram gives birth to three profit diagrams for Price Takers based on the profit level the IB asks the student to represent,

That’s pretty cool. Simplify. Simplify. Simplify.

Macroeconomics 

In Macroeconomics, it’s no different, except this time we have two Base Diagrams:

• The Neoclassical Aggregate Demand and Aggregate Supply Diagram – “Rule of 10”
• The Keynesian Aggregate Demand and Aggregate Supply Diagram – “Rule of 9”

These are the Base Diagrams students need to know, cold. Memorized. On-demand.

The rest?

The rest are Events that build from these two Base Diagrams: 

With these two Base Diagrams memorized, we can show The Events in Macroeconomic theory by simply adding one line to the diagram:

• Economic Growth
• Demand-Pull Inflation
• Cost-Push Inflation
• Deflation
• Unemployment Levels
• Recessionary Gaps
• Inflationary Gaps
• Solutions to Macroeconomic problems using Fiscal or Monetary Policy
• Impacts of Demand-Side or Supply-Side Management Policy

For ease, let’s take a look at the first three using the Neoclassical Base Diagram:

The Economic Growth Diagram:

The Demand-Pull Inflation Diagram: 

  

The Cost-Push Inflation Diagram:

I think you get the point by now.  

Base Diagram + Event = Outcome. 

The Outcome becomes the Analysis. 

Judging the Analysis becomes the Evaluation.  

It’s no different in Macroeconomics.

Let’s take a look at The Global Economy.

The Global Economy

Last one. Same deal.

There’s a Base Diagram I call the Free Trade Base Diagram, and then we have Events. 

The Events are things like a Protectionist Tariff, a Protectionist Subsidy, or a Protectionist Quota. 

So, if students memorize the Free Trade Base Diagram, then think of each of those elements as Events… 

Boom! 

One new line, and the diagram is complete. 

You see the system?

Here’s the Free Trade Base Diagram:

 

Now watch this. 

Add The Events and you get this:

The Protectionist Tariff Diagram:

 

The Protectionist Subsidy Diagram:

The Protectionist Quota Diagram:

 Ain’t it beautiful?

Lastly, I’ll just add one more little tip for The Global Economy.  

It’s about Exchange Rates. 

Don’t overthink this diagram. 

The Exchange Rate Diagram is just a simple Microeconomic Base Diagram relabeled. 

And “behaves” exactly the same. 

The only difference is that instead of the diagram being about a good, in this case corn, priced in a currency, the Exchange Rate Diagram has a currency priced in another currency.  

A currency priced in another currency.

In this case, it’s the US Dollar priced in Euros. 

Take a look:

That was a breakthrough for me in explaining to students the complex-mind-numbing-confusing Exchange Rate Diagram.

Pretty cool, right? 

As we finish, here’s a nice look at all seven of The Base Diagrams side-by-each-other:

 

Ain’t that nice? 

 

So where does that leave us?

Feeling better, I hope! 

But, look, I know… 

I know what you’re thinking…

What about The Business Cycle Diagram, The Lorenz Curve, The Phillips Curve, The Labor Market Diagram, and The Price Elasticity of Demand Diagram?  

Right! 

They don’t fit into this system of teaching Base Diagrams, Events, then Outcomes.  I get it. 

But, as my son would say, “Dude! You got a system that works for 90% of all the diagrams in IB Economics”. 

Right.  90%.  That’s pretty good.  That’s very good.

In fact, that’s really empowering as a teacher. 

But the best part?

The very best part is that teaching IB Economics through the diagrams creates critical thought-patterns for students as they construct the diagrams. Those thought-patterns train their minds to better write their Analyses and Evaluations. 

And that is invaluable over the course of a two-year IB Economics journey. 

See you next week.