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IB DP Economics SL Formula Sheet (2022-2027)

For the IB DP Economics syllabus, first examinations 2022. Revise IB DP Economics SL quantitative skills and AO4 calculations for Paper 2 with formulas across Introduction to economics, Microeconomics, Macroeconomics and The Global Economy. Find opportunity cost, elasticities, national accounting identities, GDP and GNI, economic growth, inflation rates, exchange rates and balance of payments, with the key alongside each formula.

Unofficial revision resource. This is not an official IB formula sheet. IB Economics exams do not provide formula sheets. This resource is for revision purposes only; students must be familiar with all required formulas before the exam.

Download SL formula sheet (A3 PDF)

34 SL formulas

Unit 1: Introduction to economics

Formulas

Opportunity cost of 1 unit of XThe next best alternative foregone when an economic decision is made.
Opportunity cost of 1 unit of X=Units of Y forgoneUnits of X gained\text{Opportunity cost of 1 unit of X} = \frac{\text{Units of Y forgone}}{\text{Units of X gained}}

Unit 2: Microeconomics

Competitive markets

Allocative efficiencyResources are allocated to produce the socially optimum quantity, where marginal social benefit equals marginal social cost.
MSB=MSC\mathrm{MSB} = \mathrm{MSC}

Where:

  • MSC = MPC + MEC: marginal social, private and external cost.
  • MSB = MPB + MEB: marginal social, private and external benefit.
Social costThe total cost to society of an economic activity, including private costs and external costs.
Private cost+External cost\text{Private cost} + \text{External cost}
Social benefitThe total benefit to society of an economic activity, including private benefits and external benefits.
Private benefit+External benefit\text{Private benefit} + \text{External benefit}
Area of a triangleThe amount of space inside a triangle, measured in square units.
A=12bhA = \frac{1}{2}bh

Where:

  • b = base
  • h = perpendicular height

Elasticities

Price elasticity of demandA measure of the responsiveness of the quantity demanded of a good or service when there is a change in its price.
PED=% Δ Quantity demanded% Δ Price\mathrm{PED} = \frac{\%\,\Delta\,\text{Quantity demanded}}{\%\,\Delta\,\text{Price}}
Price elasticity of supplyA measure of the responsiveness of the quantity supplied of a good or service when there is a change in its price.
PES=% Δ Quantity supplied% Δ Price\mathrm{PES} = \frac{\%\,\Delta\,\text{Quantity supplied}}{\%\,\Delta\,\text{Price}}
Income elasticity of demandA measure of the responsiveness of the demand for a good or service to a change in income.
YED=% Δ Quantity demanded% Δ Income\mathrm{YED} = \frac{\%\,\Delta\,\text{Quantity demanded}}{\%\,\Delta\,\text{Income}}
Percentage changeThe change in a value expressed as a percentage of its original value.
New value−Original valueOriginal value×100\frac{\text{New value} - \text{Original value}}{\text{Original value}} \times 100
Total revenueThe aggregate revenue gained by a firm from the sale of a particular quantity of output (equal to price times quantity sold).
TR=Price×Quantity\mathrm{TR} = \text{Price} \times \text{Quantity}

Unit 3: Macroeconomics

National accounting

GDPThe total money value of all final goods and services produced in an economy in a given time period, usually one year.

Expenditure approach

C+I+G+(X−M)C + I + G + (X - M)

Where:

  • C = consumption; I = investment; G = government spending.
  • X = exports; M = imports

Income approach

Wages and salaries+Rent+Interest+Profit\text{Wages and salaries} + \text{Rent} + \text{Interest} + \text{Profit}

Output approach

Sum of all goods and services produced in an economy\text{Sum of all goods and services produced in an economy}
Nominal GDPThe value of final goods and services produced in an economy, measured at current prices without adjusting for inflation.
Quantity of goods and services produced×Current prices\text{Quantity of goods and services produced} \times \text{Current prices}
Real GDPThe total money value of all final goods and services produced in an economy in a given time period, usually one year, adjusted for inflation.
Quantity produced×constant prices\text{Quantity produced} \times \text{constant prices}

Or

Nominal GDPPrice index*×100\frac{\text{Nominal GDP}}{\text{Price index*}} \times 100

Any price index: CPI, GDP deflator

GDP deflatorA price index measuring the prices of domestically produced final goods and services, relative to a base year.
Nominal GDPReal GDP×100\frac{\text{Nominal GDP}}{\text{Real GDP}} \times 100
GNIThe total money value of all final goods and services produced in an economy in one year, plus net property income from abroad (interest, rent, dividends and profit).
GNI=GDP+Net factor income\mathrm{GNI} = \mathrm{GDP} + \text{Net factor income}
Real GNIGross national income adjusted for changes in the price level.
Nominal GNIPrice deflator×100\frac{\text{Nominal GNI}}{\text{Price deflator}} \times 100
GDP per capitaGross domestic product divided by the total population: average output per person.
GDPTotal population\frac{\mathrm{GDP}}{\text{Total population}}
GNI per capitaGross national income divided by the total population: average income per person.
GNITotal population\frac{\mathrm{GNI}}{\text{Total population}}
Aggregate demandThe total spending in an economy consisting of consumption, investment, government expenditure and net exports.
C+I+G+(X−M)C + I + G + (X - M)

Where:

  • C = consumption; I = investment; G = government spending.
  • X = exports; M = imports;

Growth employment prices and inequality

Economic growth rateThe percentage increase in real output over time, usually measured using real GDP.
New real GDP−Old real GDPOld real GDP×100\frac{\text{New real GDP} - \text{Old real GDP}}{\text{Old real GDP}} \times 100
Unemployment rateThe number of unemployed workers expressed as a percentage of the total workforce.
UnemployedLabour force×100\frac{\text{Unemployed}}{\text{Labour force}} \times 100

Where:

  • Labour force = employed + unemployed actively seeking work.
Index numberA measure showing the value of a variable relative to a base period, usually set equal to 100.
Current valueBase-year value×100\frac{\text{Current value}}{\text{Base-year value}} \times 100
Inflation rateThe percentage change of a price index over a certain time period.
New CPI−Old CPIOld CPI×100\frac{\text{New CPI} - \text{Old CPI}}{\text{Old CPI}} \times 100

Where:

  • CPI = consumer price index.
Gini coefficientA measure of inequality based on the Lorenz curve. A coefficient of 0 represents perfect equality; 1 represents maximum inequality.
AA+B\frac{A}{A + B}

Where:

  • A = area between equality line and Lorenz curve; B = area below Lorenz curve.
  • Coefficient: 0 to 1. Index: coefficient × 100.
Real interest rate (approx.)The interest rate adjusted for inflation, approximated by the nominal interest rate minus the inflation rate.
Nominal rate−Inflation rate\text{Nominal rate} - \text{Inflation rate}

Unit 4: The Global Economy

Exchange rates

Currency conversionExpressing an amount of one currency in another currency using the exchange rate.
Amount B=Amount A×e\text{Amount B} = \text{Amount A} \times e

Where

  • e = units of currency B per 1 unit of A.
Currency changeThe percentage change in an exchange-rate quote between two periods.
Et−Et−1Et−1×100\frac{E_t - E_{t-1}}{E_{t-1}} \times 100

Where:

  • t = current period; t−1 = previous period.

A rise in this quote means A appreciates; a fall means A depreciates.

Balance of payments

Trade balanceThe difference between the value of exports and the value of imports over a given period.
Exports−Imports\text{Exports} - \text{Imports}
Current accountA measure of the flow of funds from trade in goods and services, plus net investment income flows (profit, interest, and dividends) and net transfers of money (foreign aid, grants, and remittances).
Goods balance+Services balance+Net income+Net current transfers\begin{gathered}\text{Goods balance} + \text{Services balance}\\ + \text{Net income} + \text{Net current transfers}\end{gathered}
Account balanceThe difference between the credits and debits recorded in a balance-of-payments account.
Credits−Debits\text{Credits} - \text{Debits}
Capital accountThe balance-of-payments account recording capital transfers and transactions in non-produced, non-financial assets.
Net capital transfers+Net non-produced asset transactions\text{Net capital transfers} + \text{Net non-produced asset transactions}
Financial accountThe balance-of-payments account recording cross-border transactions in financial assets and liabilities.
Net FDI+Net portfolio investment+Net reserves+Net borrowing\text{Net FDI} + \text{Net portfolio investment} + \text{Net reserves} + \text{Net borrowing}
Payments identityThe accounting relationship requiring the balance-of-payments accounts, including errors and omissions, to sum to zero under the stated sign convention.
CA+KA+FA+EO=0\mathrm{CA} + \mathrm{KA} + \mathrm{FA} + \mathrm{EO} = 0

where

  • CA = current account
  • KA = capital account
  • FA = Financial account
  • EO = errors/omissions.

Development Economics

Happy Planet IndexA measure of how efficiently environmental resources support long, happy lives. The displayed formula is a simplified approximation.
HPI≈Wellbeing×Life expectancyEcological footprint\mathrm{HPI} \approx \frac{\text{Wellbeing} \times \text{Life expectancy}}{\text{Ecological footprint}}

IB DP Economics SL formula sheet: revision FAQs

Prepare for Paper 2 calculations and AO4 quantitative skills with practical guidance on formula recall, past papers and markscheme review.

Is this an official IB Economics formula sheet, and is one provided in the exam?

No. This is an unofficial IB DP Economics SL revision resource. IB Economics exams do not provide a formula sheet, so students must be familiar with all required formulas before the exam. Use this page to learn the relationships and practise retrieving them from memory, then complete timed calculation questions without referring to it.

How should I use the SL formula sheet with IB Economics Paper 2 past papers?

Attempt a Paper 2 calculation from an IB Economics past paper, identify the relevant variables and units, and choose the formula before substituting the data. Check the result against the question-specific markscheme. Record whether an error came from formula recall, arithmetic, units, interpretation or using the wrong figures, then practise a similar calculation.

How can I prepare for IB Economics SL mock exams and trial exams?

Begin with short practice sets on individual topics, then mix calculations so that you must choose the appropriate method. Use flashcard mode to recall formulas, and complete a timed Paper 2 practice section without the sheet. For mock exams and trial exams, check your teacher’s topic coverage and calculator instructions before choosing practice questions.

What do AO2 and AO4 mean for IB Economics calculations?

AO4 includes the appropriate use of quantitative skills, such as calculating and presenting economic measures. AO2 application and analysis means using economic ideas to explain the situation or result. Practise both: calculate an inflation rate accurately, for example, then explain what the change in the price level means in the context of the question.

Which SL formulas and common calculation topics are included?

The sheet covers opportunity cost, triangle area, PED, PES, YED and percentage change; national accounting identities, GDP and GNI measures; economic growth, unemployment, inflation, index numbers and the Gini coefficient; and exchange rates and balance-of-payments relationships. These are revision topics, not predictions of which calculations will appear in your IB Economics exam.

Should I show working, units and rounding in Paper 2 calculations?

Show the formula with the actual numbers substituted and enough intermediate working to make your method clear. Include appropriate units and follow the question’s rounding instructions; keep extra precision in intermediate calculations. Check the markscheme for the particular question, because the allocation of method and answer marks varies and a correct final number alone may not earn every available mark.

Does a formula sheet replace Paper 1 assessment criteria or the Paper 2 markscheme?

No. A formula gives a mathematical relationship; it does not provide an essay structure or a complete economic explanation. Paper 1 preparation also needs theory, diagrams, real-world examples and evaluation where required. Use the assessment criteria for extended responses and the question-specific Paper 2 markscheme to check exactly what each task rewards.

What is the difference between the SL and HL formula sheets?

This page contains SL formulas. The HL formula sheet includes these SL entries and additional HL content, including market structures, weighted price indices, taxation and the Keynesian multiplier. Paper 3 is an HL examination, so SL students should use SL-appropriate Paper 2 questions rather than assuming that every Paper 3 calculation is required for their course.

Continue your revision: IB DP Economics glossaryHL formula sheetPaper 1 model essaysPaper 1 assessment guidance

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