IB Economics SL Internal Assessment Example

The diagram is relevant, but the externality type is not handled accurately. The commentary later treats $MSC$ as the key curve, yet a negative externality of consumption should be framed through $MSB$ and $MPB$ with the consumption external cost driving the wedge. The student should align the diagram title, curve labels, and explanation to the same externality model.

The curve labels do not match the stated externality model. Because the commentary describes a negative externality of consumption, the student needs to show the correct relationship between social and private benefit curves, or else reframe the example as a production externality if $MSC$ is intended to be central.

A stronger diagram would show the market equilibrium, the socially optimal quantity, and the welfare-loss triangle using consistent labels and a clear legend. That would make it much easier to connect the article’s $25$ fee to the theoretical correction of the market failure.

This explanation identifies the market failure clearly, which is useful, but it remains too broad to support the diagram precisely. The student should distinguish whether the harm comes from production or consumption of tourism, because that determines whether the correct model uses $MSC$, $MPC$, $MSB$, or $MPB$.

The axis labelling makes the economic relationship unclear. The student should label the diagram using the actual market variable being analysed, such as quantity of tourism, rather than quantity of environmental damage, so that the welfare-loss area and equilibrium points can be interpreted correctly.

This definition is not the relevant one for this commentary. In IB economics, efficiency here should be explained as allocative efficiency, where social welfare is maximised when $MSB=MSC$. The student should replace the generic productivity definition with the economic meaning that fits the article and the diagram.

This is a strong analytical link between policy design and the article’s stated use of revenue. The student shows why the tax may improve outcomes beyond simply reducing demand, which helps connect the policy to both efficiency and environmental restoration.

What evidence is there that Hawaii tourism demand is actually elastic or inelastic? The student’s evaluation would be stronger if this claim were supported with a market-specific determinant of elasticity, such as the availability of substitutes, the proportion of income spent, or the time horizon.

This is a good point to develop further by explaining why elasticity matters for the policy outcome. The student could compare likely elasticities for leisure tourism in Hawaii and use that to judge whether the tax mainly reduces visitor numbers or mainly raises revenue.

The student applies theory directly to the article by linking the proposed fee to a corrective tax and the stated revenue estimate. This is effective application because it moves beyond theory in isolation and uses the article’s numerical evidence to support the policy discussion.

The student could strengthen this analysis by explaining the mechanism more precisely: how would these projects reduce the marginal external cost of tourism, and would the spending likely be enough to offset the damage? That would make the link between revenue use and efficiency much more convincing.

This is the central theoretical problem in the commentary: the externality type and the curves do not match. If the student is describing a negative externality of consumption, the explanation should not rely on $MSC$ being the main social curve. The student should either correct the model or justify a different externality classification consistently throughout.

The mechanism is explained clearly, but the theory is not internally consistent. A corrective tax should be justified by the relevant external-cost diagram, and the student should show precisely why a $25$ fee equals or approximates the marginal external cost. Without that link, the move from $Q$ to $Q^{\ast }$ is asserted rather than analysed.

The student clearly identifies efficiency as the key concept and connects it directly to social surplus and the MSC = MSB condition. This is a strong conceptual anchor because it shows an understanding of allocative efficiency rather than simply mentioning the word 'efficiency' in a general sense.

The student makes a balanced evaluative judgment by acknowledging both the benefits of the tax and its possible costs. This is effective evaluation because it avoids a one-sided conclusion and recognises that policy success depends on real-world responses.

The conclusion recognises both sides of the issue, but it does not weigh them against each other in a sustained way. The student should explain which outcome should carry more weight for decision-makers and support that choice with evidence from the article and economic theory.

The evaluation would be stronger if the student compared alternatives directly. For example, the commentary could assess whether trail permits or a hotel-tax increase would target the external cost more precisely than a flat $25 visitor fee.

This judgment is sensible but still quite general. The student should make a clearer decision about which policy is most likely to work best and under what conditions, rather than only stating that trade-offs exist.