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IB Economics SL Paper 2 Mock Paper | Data Response, 40 Marks, 1 h 45 | Marking Notes + PDF
IB Economics · Paper 2 data response
IB Economics SL Paper 2 mock: two data-response questions, 40 marks in 1 h 45, with marking notes, worked figures and exam technique. Original questions, not past IB papers; printable PDF.
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Paper details Level: IB Diploma SL | Subject: Economics | Time: 1 h 45 min | Marks: 40 | Questions: 8
Question 1 — Ride-hailing market and a per-trip tax (20 marks)
Extract 1: The ride-hailing market in City Y
The ride-hailing platform in City Y cut the average fare from $30 to $24 in 2024, and the number of trips per month changed accordingly. In 2025 the government imposed a specific tax of $6 per trip; the platform set the fare at $27.5 and paid drivers $21.5 per trip.
| Item | Before the fare cut | After the fare cut | After the tax |
|---|---|---|---|
| Average fare ($) | 30 | 24 | 27.5 |
| Trips per month | 500 000 | 540 000 | 510 000 |
(a) Elasticity and the nature of demand
| # | Question | Answer and marking notes |
|---|---|---|
| 1 | Using Extract 1, calculate the price elasticity of demand for ride-hailing trips when the average fare falls from $30 to $24, and state whether demand is elastic or inelastic. (4 marks) | Answer: % change in fare = (24 − 30) ÷ 30 × 100% = −20%; % change in trips = (540 000 − 500 000) ÷ 500 000 × 100% = +8%; PED = |+8% ÷ −20%| = 0.4. Because 0.4 is below 1, demand is inelastic. Marking: each percentage change (2); value 0.4 (1); judgement with reason (1). |
(b) Change in total spending
| # | Question | Answer and marking notes |
|---|---|---|
| 2 | Explain why riders total monthly spending fell after the fare cut, and calculate the percentage change in total spending using Extract 1. (4 marks) | Answer: spending before = 30 × 500 000 = $15 000 000; after = 24 × 540 000 = $12 960 000; change = (12 960 000 − 15 000 000) ÷ 15 000 000 × 100% = −13.6%. Demand is inelastic (0.4), so a 20% fare cut raises trips by only 8%: the quantity response is too small to offset the lower fare, so total spending falls. Marking: two spending totals (2); −13.6% (1); inelastic explanation (1). |
(c) Tax incidence and revenue
| # | Question | Answer and marking notes |
|---|---|---|
| 3 | Using Extract 1, calculate how the $6 per-trip tax is shared between riders and drivers and the governments tax revenue, and explain how a specific tax is shown on a supply and demand diagram. (4 marks) | Answer: rider share = 27.5 − 24 = $3.5 (58.33%); driver share = 24 − 21.5 = $2.5 (41.67%); the two sum to $6. On the diagram the specific tax shifts the supply curve vertically up by $6, the equilibrium quantity falls from 540 000 to 510 000, the price paid by riders rises and the price received by drivers falls. Tax revenue = 6 × 510 000 = $3 060 000. Marking: two shares (2); two percentages (1); revenue plus supply shift (1). |
(d) Policy evaluation
| # | Question | Answer and marking notes |
|---|---|---|
| 4 | Discuss whether the government should impose a $6 per-trip tax on ride-hailing. (8 marks) | Answer: For — ride-hailing creates congestion and air pollution, a negative externality; the tax internalises the marginal social cost, cutting trips from 540 000 to 510 000 (5.56%) and raising $3 060 000 that can fund public transport. Against — demand is inelastic (0.4), so 58.33% of the tax falls on riders, a regressive burden on low-income commuters, while trips fall only 5.56%, so the emission gain is small; if public transport is a weak substitute riders simply pay more; platforms also bear compliance costs. Judgement — if the aim is to cut external costs, the rate should match marginal external cost and the revenue should fund substitutes, otherwise the policy mostly raises prices with little change in quantity. Marking: for (mechanism plus data) 3; against (mechanism plus data) 3; judgement 2. |
Question 2 — Macroeconomic policy in Zeta (20 marks)
Extract 2: Key indicators of the Republic of Zeta, 2025-2026
The table shows nominal GDP, the GDP deflator, potential output and labour market data for the Republic of Zeta. In 2026 the government plans to raise public spending by $6 billion; the marginal propensity to consume is 0.75.
| Item | 2025 | 2026 |
|---|---|---|
| Nominal GDP ($ billion) | 480 | 520 |
| GDP deflator | 104 | 108 |
| Potential output ($ billion) | — | 500 |
| Labour force (millions) | — | 12.0 |
| Employed (millions) | — | 11.16 |
The weights and price changes of the components of the consumer price index (CPI) are shown below.
| Component | Weight (%) | Price change (%) |
|---|---|---|
| Food | 30 | +5 |
| Housing | 40 | +4 |
| Transport | 20 | −2 |
| Other | 10 | +3 |
(a) Unemployment and weighted inflation
| # | Question | Answer and marking notes |
|---|---|---|
| 5 | Using Extract 2, calculate the unemployment rate in 2026 and the weighted inflation rate based on the CPI weights. (4 marks) | Answer: unemployed = 12.0 − 11.16 = 0.84 million; unemployment rate = 0.84 ÷ 12.0 × 100% = 7.0%. Weighted inflation = 0.30 × 5% + 0.40 × 4% + 0.20 × (−2%) + 0.10 × 3% = 1.5% + 1.6% − 0.4% + 0.3% = 3.0%. Marking: unemployment rate 2 (method 1, answer 1); weighted inflation 2 (weights 1, answer 1). |
(b) Real GDP and the output gap
| # | Question | Answer and marking notes |
|---|---|---|
| 6 | Calculate real GDP in 2026 and the output gap as a percentage of potential output, and state whether the economy has a deflationary or an inflationary gap. (4 marks) | Answer: real GDP = 520 ÷ 108 × 100 = $481.5 billion (2025: 480 ÷ 104 × 100 = $461.5 billion, real growth 4.32%); output gap = (481.5 − 500) ÷ 500 × 100% = −3.70%, so real output is 3.70% below potential: a deflationary (negative) gap. Marking: real GDP 2; gap percentage 1; correct label 1. |
(c) Fiscal policy and the multiplier
| # | Question | Answer and marking notes |
|---|---|---|
| 7 | Using the aggregate demand and aggregate supply model, explain the effect of a $6 billion rise in government spending on real GDP, and calculate the total change under the multiplier. (4 marks) | Answer: multiplier = 1 ÷ (1 − 0.75) = 4; total rise in real GDP = 4 × $6 billion = $24 billion, taking real GDP from $481.5 billion to $505.5 billion. Aggregate demand shifts right, equilibrium output rises towards potential output of $500 billion, but the final level exceeds potential by about $5.5 billion (1.1%), creating demand-pull inflationary pressure. Marking: multiplier 1; $24 billion 1; AD shift and higher equilibrium output 1; overshoot risk 1. |
(d) Comparing the two policies
| # | Question | Answer and marking notes |
|---|---|---|
| 8 | Discuss whether the government of Zeta should use fiscal policy or monetary policy to close the output gap. (8 marks) | Answer: Fiscal policy — a $6 billion rise in spending raises real GDP by $24 billion through a multiplier of 4, closing much of the 3.70% deflationary gap, and targeted spending on infrastructure and training can also cut structural unemployment; but recognition and implementation lags are long, the stimulus may push output above potential ($505.5 billion, 1.1% over) and raise inflation (already 3.0%), and it may widen the fiscal deficit. Monetary policy — a rate cut lowers borrowing costs and can lift investment and consumption, is decided quickly and independently, but weak business confidence may make investment unresponsive, and with inflation at 3.0% there is limited room for loosening. Judgement — with a 3.70% deflationary gap, fiscal policy is the more direct and controllable tool, supported by monetary easing, with the size of the stimulus set by the gap and inflation data to avoid overshooting. Marking: fiscal argument 3; monetary argument 3; comparison and judgement 2. |
A TutorZone practice paper; original questions and passages, not publisher material.
