IB Economics SL Internal Assessment Example

The student correctly shows the private and social cost curves starting together, which is essential for a negative-externality diagram. That helps the reader see that the market failure comes from the gap between private and social costs, not from the initial equilibrium itself.

If the tax is set to correct the externality, which area on the diagram represents the original welfare loss from overconsumption, and what should happen to it after intervention? Clarifying this would help the student check whether the welfare areas are labelled consistently.

The student includes a relevant diagram title that matches the article’s policy focus. This is good practice because it signals immediately that the diagram is being used to model the cigarette/vape market rather than a generic tax diagram.

This label is not fully accurate in the way it is used here. If the tax is intended to internalize the marginal external cost and move consumption to the social optimum, it should eliminate the original welfare loss rather than create a new one.

The student could improve the diagram explanation by explicitly stating that the tax raises consumer price and lowers producer price. That would make the incidence of the tax clearer and would connect the graph more directly to the article’s price increase.

The student's area labels make the post-tax welfare effects difficult to follow precisely. It would strengthen the diagram if they clearly distinguished between consumer surplus, producer surplus, tax revenue, and any remaining deadweight loss so the reader can track each area confidently.

The student uses several relevant economic terms accurately in one sentence: indirect tax, demerit goods, and negative externalities of consumption. This helps show that they understand the policy as a market intervention aimed at correcting market failure.

This is not an appropriate use of terminology for a corrective indirect tax. If the tax is set to internalize the external cost, it moves consumption toward the socially optimal level rather than creating a new welfare loss, so this wording weakens the accuracy of the student's commentary.

The student should be careful here: the tax does not itself reduce demand; it raises price and causes a contraction in quantity demanded. Using the correct terminology matters because it shows the direction of causation and keeps their analysis precise.

The student could improve precision by distinguishing between a movement along the demand curve and a shift in demand. If they explain which change is occurring, their terminology and analysis will both become more accurate.

The student applies the externality model directly and correctly starts from market equilibrium. This is effective because it anchors the article in a clear theory of market failure before moving to the policy response.

The surplus changes are discussed, but the interpretation is not fully accurate because a corrective tax does not simply create a new welfare loss. The student should explain that the tax transfers some surplus to government revenue and can eliminate the original overconsumption loss if it is set appropriately.

This weakens the analysis because it treats a corrective tax as if it necessarily worsens efficiency. The student needs to separate the original market failure from the tax outcome: if the tax is calibrated well, it should reduce the welfare loss from overconsumption.

The student moves beyond the diagram to analyze short-run behavioural responses, which strengthens their application. This shows that they are using theory to interpret likely real-world outcomes rather than treating the graph as the full answer.

If demand is inelastic in the short run, what does that imply about the size of the tax’s immediate effect on consumption and tax incidence? Thinking about this could help the student make their causal chain more precise.

This is a strong application of theory because the student explains the mechanism of the tax, the fall in quantity, and the link to reduced external costs. They also connect the diagram to the policy goal, which shows that the model is being used analytically rather than just labeled.

Consider making the substitute relationship more explicit: explain whether cigarettes and vapes are substitutes and whether the tax causes a movement along demand or a change in relative prices. That would make the analysis of unintended consequences more precise and convincing.

This is a strong analytical point because the student distinguishes short-run from long-run responsiveness. That comparison helps explain why the same policy may become more effective over time, which is exactly the kind of development expected in a higher-band commentary.

The student identifies the key concept clearly and immediately connects it to the article’s policy measures. This works well because it sets up the whole commentary around government action in the market, rather than treating the concept as a label only.

The student maintains a strong link back to the article by using the youth-vaping concern as evidence for why intervention matters. That makes the concept analytical, not just descriptive, because they show how the policy is meant to change consumer behaviour in a specific market.

To make the concept connection even sharper, briefly explain how each of these factors changes the success of intervention in this particular article. For example, specify whether they strengthen or weaken the tax’s ability to correct the market failure.

This undermines the evaluation because it leads to an inaccurate judgment about the policy’s welfare effect. A well-judged conclusion should recognise that a corrective tax can improve allocative efficiency even if it reduces producer surplus and consumer surplus.

The student makes a clear overall judgment and supports it with a relevant policy reason. This works well because their conclusion is not just descriptive; it weighs the intervention’s benefits against its limitations.

The student balances their judgment by considering both short-run limitations and possible unintended consequences. That kind of conditional evaluation is strong because it shows they understand that policy success depends on real-world responses, not just the theoretical aim.

To strengthen the evaluation further, the student could add a brief judgment about which factor is likely to matter most in this Irish case. Ranking the importance of substitutes, habits, and PED would make their conclusion more decisive.