IB Economics HL Internal Assessment Example

How would the student's welfare-loss explanation change if the subsidy pushed output past the socially optimal level? Thinking about that possibility could help them show deeper understanding of when a subsidy worsens versus partially corrects inefficiency.

The student includes a highly relevant diagram that directly models the market failure discussed in the article. The figure is well chosen because it lets them show the welfare-loss consequence of fossil-fuel consumption, not just the subsidy itself.

The student's diagram explanation is clear and economically accurate. They explain what the curves represent and why the gap matters, which shows that the figure is not just decorative but actually supports their argument.

The student's explanation is on the right track, but it would be stronger if they stated explicitly why the subsidy does not change $MSC$ or $MSB$. A brief reminder that the subsidy only lowers the private cost paid by firms would make the diagram logic even tighter.

This is a strong companion diagram because it adds a second policy dimension: government spending. Using two diagrams lets the student analyse both efficiency and fiscal cost, which makes the commentary much more complete.

The student explains the government-expenditure diagram well by relating the rectangle to the subsidy per unit times output. That is exactly the kind of concise diagram interpretation that strengthens an economics commentary.

This is a useful comparison across time because it shows how the policy change affects the size of the expenditure area. Comparing 2016 and 2023 in this way makes the diagram more analytical and more closely tied to the article.

The student uses the core microeconomic terminology accurately and in context. Terms like marginal private benefit, marginal social benefit, and marginal external cost are deployed to explain the market failure, which shows genuine command of the language rather than memorised definitions.

This terminology is applied appropriately and economically. The student connects price, costs, incentives, and profits in one clear chain, which helps the commentary read as analysis rather than a list of terms.

The student's terminology is mostly strong, but a little more precision would improve this sentence. They could consider distinguishing between accounting profit and economic profit, and should avoid implying that all firms are affected identically; that would make the discussion more technically exact.

This is a strong application of subsidy theory. The student explains not just that a subsidy exists, but how it changes the supply side through lower production costs, which makes the theory directly relevant to the article.

The student applies the externality model thoroughly here. By identifying the socially optimal output as the intersection of $MSC$ and $MSB$, they establish the theoretical benchmark before analysing the effect of the subsidy.

The student extends the diagram effectively into a policy outcome. Linking the higher subsidy to a larger quantity and greater government expenditure shows that they are applying theory to the article’s evidence rather than stopping at diagram description.

This develops the analysis well, but the long-run claim is a little too definite. Consider qualifying it by discussing elasticity, adjustment costs, and whether cleaner substitutes are actually available at scale, because those factors determine how strong the long-run response would be.

This is a good causal analysis. The student shows how the policy change affects both demand and supply behaviour, which helps explain why the quantity falls rather than simply stating that it does.

What evidence shows that the market will “act freely” in a way that is effective in the short run? Thinking about the persistence of the externality here could help the student separate a change in intervention from a true improvement in allocative efficiency.

The student clearly identifies a key concept that fits the article very well. Using “intervention” gives their commentary a strong organising lens because the whole issue is about governments actively shaping fossil-fuel markets through subsidies.

This links the key concept directly to the article’s economics in a convincing way. The student does not just name intervention; they show how subsidy policy changes incentives and competitiveness, which makes the concept analytically useful rather than decorative.

This is a strong concept-based judgment. To make the link even sharper, the student could explicitly distinguish between removing one form of intervention and correcting the underlying market failure, so the reader sees why intervention is the concept and not just the policy instrument.