1. What Is the Formula Booklet? The IB Economics HL Formula Booklet (officially the Economics formula sheet ) is provided during Paper 2 (Quantitative) and Paper 3 (HL only) .

DP HL students use it extensively in Paper 3 (policy & calculation paper). SL students receive a shorter version (no HL extension formulas).

⚠️ The booklet contains no theory, no definitions, no diagrams — only formulas, multipliers, and some tax/Math rules.

2. Key Sections & Formulas You Must Know Microeconomics | Concept | Formula | |---------|---------| | PED | (%ΔQd) / (%ΔP) | | YED | (%ΔQd) / (%ΔY) | | XED | (%ΔQd good A) / (%ΔP good B) | | PES | (%ΔQs) / (%ΔP) | | Tax revenue | Tax per unit × Quantity after tax | | Consumer surplus (CS) | ½ × (max price − equilibrium price) × equilibrium Q | | Producer surplus (PS) | ½ × (equilibrium price − min price) × equilibrium Q | | Price floor/ceiling effects | Shortage/Surplus calculations (using linear demand/supply) | Macroeconomics | Concept | Formula | |---------|---------| | GDP (expenditure) | C + I + G + (X − M) | | GNI | GDP + Net income from abroad | | Inflation rate | (CPI_new − CPI_old) / CPI_old × 100 | | Unemployment rate | (Unemployed / Labour force) × 100 | | Labour force | Employed + Unemployed | | Multiplier | 1 / (1 − MPC) or 1 / (MPW) (MPW = MPS + MPT + MPM) | | Output gap | (Actual GDP − Potential GDP) / Potential GDP × 100 | International Economics | Concept | Formula | |---------|---------| | Terms of trade | (Export price index / Import price index) × 100 | | Real exchange rate | Nominal exchange rate × (Domestic price / Foreign price) | | Tariff revenue | Tariff per unit × Import quantity after tariff | HL Extension Topics (Paper 3 – only in HL booklet)

Linear demand/supply equations (e.g., Qd = a − bP , Qs = c + dP ) Equilibrium solving Tax incidence (per unit tax on producers/consumers)

New equilibrium with tax Consumer tax burden = (Pt − Pe) × Qt Producer tax burden = (Pe − Pp) × Qt

Subsidy calculations (cost to government, change in CS/PS) Welfare loss (deadweight loss) = ½ × tax × ΔQ Profit max for monopoly (MR = MC) — no formula given, but elasticity–MR relation MR = P(1 − 1/PED) is in HL booklet.

3. What Is Not in the Booklet (Memorize these) | Concept | Why important | |---------|----------------| | AC, AVC, MC definitions | No unit cost formulas given | | Lorenz curve & Gini | Only graphical interpretation | | Phillips curve | No equation — conceptual | | Keynesian multiplier process | You must know MPC, MPS, MPT, MPM relationships | | Money multiplier | 1 / Reserve ratio — not in booklet | | Real interest rate | Nominal − Inflation — not explicitly written | | Balance of payments formulas (current account components) | Not listed as equations |

4. How to Use It Effectively in an Exam ✅ Do:

Flip to the right section quickly (Micro, Macro, Int’l, HL extensions). Write down what each variable stands for (e.g., MPC = marginal propensity to consume ). Use it to check formulas — not to learn them during the exam.

❌ Don’t:

Waste time searching for simple formulas (e.g., percentage change — you should know that). Assume it explains how to apply the formula — it doesn’t. Use it for diagrams, explanations, or evaluation.