IB Economics Trade Diagram Explained

Tariff questions are common in IB Economics Paper 2 because they let examiners test diagrams, welfare effects, and evaluation in one move.

How to draw the trade diagram

1. Draw domestic demand and supply
2. Add the world price line
3. Add the tariff line above the world price
4. Show the reduction in imports after the tariff

What to explain after the diagram

• Domestic price rises
• Domestic output rises
• Consumption falls
• Imports contract

Then evaluate. Is the tariff protecting local jobs, raising revenue, or simply making imported goods less affordable for consumers? That judgment is what lifts the answer.

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