Starting point one · no student data involved

Paper 2, Built From a News Story

Turning real policy into assessment material — the safest place to begin

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Textbook data is out of date the day it prints. A policy story from this month is not, and students notice the difference — particularly when the policy is one they can see from the classroom window.

Below is a complete data response in the standard format. It involves no student data whatsoever: nothing to consent to, nobody to ask, and nothing that can go wrong beyond a question that needed rewording. Underneath it is the method, which is the part worth taking away.

Economics · Higher level and standard level · Paper 2

Data response

Read the extracts and answer the questions that follow.
Use fully labelled diagrams and references to the text/data where appropriate.
You must show all your working.  Maximum mark: [40 marks]
阅读材料并回答下列问题。请使用完整标注的图形,并适当引用文本与数据。满分 40 分。
Text A — China's electric vehicle industry

1Over the past decade China has become the world's largest producer of electric vehicles (EVs). Output has risen steeply, though not evenly: the industry expanded rapidly in some years and contracted in others as the wider economy slowed. As firms have grown, many have achieved substantial economies of scale, particularly in battery manufacturing, where a small number of very large producers now supply much of the world.

2Government support has been extensive. For several years buyers received a direct subsidy on each qualifying vehicle, manufacturers were exempted from certain purchase taxes, and large sums were spent on public charging infrastructure. The per-vehicle subsidy has since been reduced sharply as the industry has matured.

3Competition between domestic producers is intense. Average prices have fallen year on year, several smaller manufacturers have left the market, and profit margins across the industry are thin. Employment in the sector has nonetheless continued to grow.

4Exports have grown faster than domestic sales. Chinese EVs are now sold across Asia, Europe and Latin America, and vehicles have become one of the country's most significant manufactured exports.

Text B — Shanghai's licence plate policy

1Shanghai limits the number of new private car licence plates issued each month by setting a quota. Plates are not sold at a fixed price but auctioned, and the number available is decided in advance by the city government, independently of how many people want one. Demand consistently exceeds the quota by a wide margin, and only a small proportion of bidders succeed in any month.

2The policy is defended on the grounds of congestion and air quality. Each additional petrol car imposes costs on people other than its driver — slower journeys for everyone else, and worse air for those who do not drive at all. Critics argue the auction favours wealthier households, and that some buyers have responded by registering vehicles in neighbouring provinces.

3Plates for battery electric vehicles have been treated differently, and have been issued under far less restrictive conditions in order to encourage a shift away from petrol engines. Registrations of electric vehicles in the city have risen sharply as a result.

Text C — Trade tensions

1The rapid growth of Chinese EV exports has prompted a response abroad. The European Union has imposed additional tariffs on imported Chinese electric vehicles, arguing that state support gives producers an unfair cost advantage. Chinese manufacturers have responded in three ways: absorbing part of the tariff by cutting prices, redirecting exports towards markets without such tariffs, and building assembly plants inside the European Union.

2Strong export demand affects the currency as well. Foreign buyers must obtain Chinese yuan (CNY) to pay for vehicles, and economists disagree about how far this has offset other pressures on the exchange rate.

Table 1 — Shanghai licence plate auction (illustrative)
MonthPlates availableBiddersAverage winning bid (RMB)
January10 000168 00092 300
February10 000174 50093 100
March12 000191 20091 800
April12 000203 60092 600
Table 2 — China's electric vehicle industry (illustrative)
20192025
EV production (million units)1.212.4
EV exports (units)220 0001 900 000
Value of EV exports (USD billion)5.545.6
EVs as share of new car sales (%)4.748.0
Average domestic EV price (RMB thousand)232168
Employment in the sector (millions)1.13.4
Table 3 — Selected indicators (illustrative)
20192025
Exchange rate (CNY per EUR)7.748.15
Real GDP growth (%)6.04.8
EU tariff on imported Chinese EVs (%)10.035.3
Government spending on EV subsidies (RMB billion)3211
PM2.5 concentration, major cities (µg/m³)4229
(a)(i)Define the term quota indicated in bold (Text B, paragraph 1). 定义“配额”[2]
(ii)Define the term economies of scale indicated in bold (Text A, paragraph 1). 定义“规模经济”[2]
(b)(i)Using information from Table 2, calculate the average value per electric vehicle exported in 2019 and in 2025. 计算每辆出口电动汽车的平均价值[2]
(ii)Sketch a business cycle diagram and indicate a period of expansion and a period of contraction on the diagram (Text A, paragraph 1). 绘制经济周期图[3]
(c)Using a demand and supply diagram to indicate the total cost of the subsidy to the government, explain how reducing the per-vehicle subsidy may affect government spending (Text A, paragraph 2). 补贴与政府支出[4]
(d)Using a negative externality of consumption diagram, explain why the use of petrol cars in a large city may result in a welfare loss (Text B, paragraph 2). 消费的负外部性与福利损失[4]
(e)Using a tariff diagram, explain the effect of the European Union's tariff on the quantity of Chinese electric vehicles sold in the European Union (Text C, paragraph 1). 关税的影响[4]
(f)Using an exchange rate diagram, explain how rising foreign demand for Chinese electric vehicles might influence the value of the Chinese yuan (CNY) (Text C, paragraph 2). 汇率的变动[4]
(g)Using information from the text/data and your knowledge of economics, evaluate the likely consequences of government support for the electric vehicle industry on the Chinese economy. 评价政府支持的可能影响[15]

How This Was Made

The transferable part — about half an hour

Start with a policy, not a topic. "Externalities" produces a generic paper. A specific policy with a real mechanism produces one with something to argue about. The best stimulus is one where reasonable economists disagree — here, whether state support for an industry has been worth its cost, which is the whole of part (g).

Choose a story broad enough to carry the paper. This is the constraint people miss. A data response has to reach across the syllabus: the four-mark questions above want four different diagrams. A story about one market cannot do that. A story about an industry, its home city's policy and its export markets can — subsidy, externality, tariff, exchange rate, all from the same material.

Make the local example the default, not the treat. Half of this is visible from a Shanghai classroom window. Students who have watched a parent bid for a licence plate arrive with an intuition the textbook cannot give them, and evaluation is where that intuition pays.

Write the command terms last. Build the texts and tables first, then ask what they can genuinely support. A table with two columns supports a calculation and a comparison; it does not support a question about trends across a decade. Most weak practice questions are ones the data cannot actually answer — so the last check is to answer every part yourself, using only what is printed.

Three honest notes

The figures are illustrative. They are the right shape for the policies described and they make the calculation work, but they should not be quoted as data. For a real sitting, drop in current published figures; the questions do not change.

Check it against the current subject guide. The structure follows the standard format — two definitions, a calculation, a sketch, four diagram questions and a fifteen-mark evaluation, totalling forty. But the guide is the authority.

This is an original paper, not a past paper. It was written for this page. Past examination papers are the IB's copyright and are not reproduced here.

Why this is the safest starting point

Nothing on this page involves a single student. No personal information, so no cross-border transfer question, no consent to obtain, and nobody who can be harmed if the output is poor. The worst case is a question you rewrite.

That is exactly why it is first. You learn what these tools are genuinely good at on work where being wrong costs you nothing — and by the time you reach the tasks that do involve student data, you already know which parts to keep for yourself. The other two starting points →

More Papers

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Level descriptors for every part, the diagram each question expects, worked figures for the calculation, and what separates a top-band evaluation from a competent one. Plus a bilingual key-terms list.
📝 Exam Room — IBEcon.cn
Paper 1, Paper 2 and Paper 3 practice built this way over a summer. China-hosted, so it opens without a VPN.
IGEcon.cn — the IGCSE 0455 equivalent
The same approach for Cambridge IGCSE Economics.