So... you have chosen an article to base your economics internal assessment ("IA") on and are moving to the next step of planning your IA. This article sets out a seven-step process that you can use to make writing your IA that little bit easier.
Step 1
Find a newspaper article (*on a weekly basis) and record the website address and date of the article.
The article that we will analyse in this example can be found here.
Step 2
Highlight the relevant text for your application
Step 3
Outline key terms to be defined.
*Define the necessary terms if not clear
- Market Failure – inefficient allocation of resources
- Externalities:
Demerit good – plastic bags creating a negative externality of consumption
Merit good – biodegradable bags or cloth bags creating a positive externality of consumption
- Welfare loss
- Government Intervention:
command and controlled method – Banning
Free-market-oriented – indirect taxation on plastic bags
Subsidy to promote the positive externality
Step 4
Outline key Economic theory to be used
- Market Failure – existence of externalities
- Demerit good – the consumption of plastic bags leads to a negative externality of consumption, the external cost is unhealthy oceans and fishing grounds, destroying the natural habitat, environmental damage to trees and environment (Reference to the quotes from the article):
- A fishing hub near the mouth of the Copper River, is dependent on healthy oceans. She said a plastic bag ban would help reinforce that message in the community. It would also help clean things up.
- She said it’s not unusual to see plastic grocery sacks stuck in trees or bushes along the highway leading out to the landfill, 17 miles from the city center.
- He often goes hunting for rabbits along the road. Bags and plastic foam clamshell boxes dot the landscape. “They’re everywhere.”
- Explanation of the diagrams and short overview of short-run and long-run effects of this externality to the society
- Government Intervention – use of the command and controlled method – banning ( direct regulation) to diminish the negative externality
- Discussion on the short-run and long-run pros and cons of the banning – government intervention in the market: Use of quotes from the article to support discussion:
- He said the biggest challenge has been trying to get Cordova’s sizable transient population to understand the upcoming ban
- Cordova’s one-year lag was to give businesses time to adapt to the change,
- Enforcement will be through the police department, with violators facing a fine of up to $1,000. But interim city manager and Police Chief Mike Hicks said it’s unlikely the maximum fine would be imposed. He said most retailers have been receptive to the change.
- “I don’t think we’re going to have any problems with people switching over,” he said. “I think it’s going to go just fine.”
- Comparison to alternative policies as outlined in the article: a Fairbanks tax on plastic bags was considered
- Discussion on direct regulation impact vs use of indirect taxation ( free-market method) so compare and contrast pros and cons of the banning with the indirect taxation
- Be clear on the meaning of Fairbanks ( see here for further information: https://en.wikipedia.org/wiki/Fairbanks,_Alaska)
- Use of quotes from the article to support discussion:
A Fairbanks tax on plastic bags was considered by the City Council in 2009, but community pushback forced the city to rescind the measure before it ever went into effect.
- Other alternative solutions – promotion of merit good – biodegradable bags and/ or reusable cloth bags e.g. through subsidy: Use quotes from the article:
- He’s been saving boxes and looking into buying reusable cloth bags for customers. But those are expensive, and customers would have to pay for them.
- This summer the store handed out 400 reusable bags hoping to target those customers. They were a hit.
- “We have a lot of people come through with the cloth bags,” Branch said. “It’s really is cool to see people embracing it.”
Step 5
Draw at least two relevant diagrams (*these must be your own drawing and labeling)
- Negative externality of consumption ( plastic bags – external cost – environmental hazards) + effect of banning
- Imposition of a fairbanks tax ( indirect tax) on plastic bags in the negative externality of consumption diagram
- Positive externality of consumption (cloth bags) + use of subsidy to promote these further and support businesses and customers in the transition period
For example:

Economics IA graph example
Step 6
Brainstorm some ideas for evaluation –
- impact of policies stated in the article
- impact on stakeholders in the short and long-run,
- suggest alternative policies,
- refer to Schools of Economic Thought
Step 7
Get writing!
Really a very helpful article thanks for sharing and keep on sharing!