Ib Econ Past Papers May 2026

Then she wrote: “While demerit goods (e.g., cigarettes) generate negative consumption externalities, taxation is not always the optimal solution. If demand is inelastic, the tax may not reduce quantity significantly, and deadweight loss may be small, but the tax becomes regressive.” She cited a real-world example: Singapore’s high tobacco taxes versus the black market in e-cigarettes.

It was three days before the final IB Economics exam, and Maya had a problem. Not a problem of supply and demand—though her anxiety was certainly spiking—but a problem of strategy. Her textbook was highlighted into a rainbow blur, her flashcards had fused together in a coffee spill, and her brain could define “allocative efficiency” in her sleep. But she knew, deep down, that knowing the definition wasn’t enough. The IB didn’t ask for definitions. It asked for application .

Maya chose a question from Microeconomics: “Explain how the introduction of a per-unit tax on a good can lead to a deadweight loss. Using a diagram, evaluate whether governments should always tax demerit goods.” Ib Econ Past Papers

The first paper she pulled out was Paper 1, May 2023 (TZ2). The title alone sent a shiver down her spine. She remembered her teacher, Mr. Choudhury, saying, “The past paper is a mirror. It shows you what you actually know, not what you hope you know.”

She began to sketch. Demand and supply curves. A vertical wedge for the tax. The shrinking of consumer and producer surplus. And there it was—the Harberger triangle. Deadweight loss. Not just a term from a glossary, but a real loss of total welfare. She labeled everything: Pc for consumers, Pp for producers, Qt for quantity after tax, Qe for equilibrium. Then she wrote: “While demerit goods (e

She walked out of the exam hall into the spring sun. Two more papers to go. But she wasn’t worried. She had the archives on her side.

By the end of the night, she had done three papers. Her room was a sea of diagrams, evaluation points, and examiner’s notes scribbled in red. But something had changed. The exam was no longer a monster hiding in the dark. It was a predictable machine. Paper 1 was always theory and evaluation. Paper 2 was data response and real-world application. Paper 3 (HL) was calculation and policy. Not a problem of supply and demand—though her

When the timer buzzed, her hand was cramped, but her confidence was not. She compared her answer to the markscheme. She had missed one key point: the role of cross-elasticity of demand for substitutes. A point lost, but a lesson learned.