Glossary of IB Economics Terms

To excel in IB Economics, students need to have a good understanding of Economics Terminology. This is can be rather daunting for most students. In this page, we created a glossary of IB Economics terms to help students search for Economics definitions in just a few clicks. We hope you will find this tool useful.

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IB Economics Terms

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There are currently 9 names in this directory beginning with the letter E.

Economies and diseconomies of scale

Economies of scale exist if average costs decrease as the size of (scale) of the firm increases. A firm is facing diseconomies of scale if unit costs rise as it further expands in size.

Elasticity

The responsiveness of an economic variable to a change in some other economic variable. For example, price elasticity of demand.

Equilibrium

A market is considered to be in equilibrium if there is no tendency for change. This will be the case if quantity demanded per period equals quantity supplied.

Exchange rate

Price of one currency expressed in terms of another currency.

Exit barriers

Costs that a firm incurs upon exit.

Expenditure changing policy

Expenditure changing demand management policies that will lower aggregate demand and thus national income thus reducing imports and a trade deficit. Expenditure switching: policies that will try to switch expenditures away from imports and towards domestic products by making imports relatively more expensive and thus undesirable. For example, through devaluation or through the imposition of tariffs.

Expenditure switching policy

Refer to expenditure changing policy

Export subsidy

A payment granted by a government to domestic firms to strengthen their competitiveness against foreign producers.

Externalities

When an economic activity creates benefits or imposes costs for third parties for which these do not pay or do not get compensated respectively.