Section 1 The basic economic problem
The first section of the syllabus introduces the fundamental ideas and concepts that underpin the study of economics including the basic economic problem, factors of production, opportunity cost and production possibility curves.
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1.1 The nature of the economic problem - syllabus aim is a knowledge and understanding of finite resources, unlimited wants economic and free goods.
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Guidance
- Definition and examples of the economic problem in the contexts of: consumers; workers; producers; and governments. - The difference between economic goods and free goods. |
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1.2 The factors of production - syllabus aim is to explain definitions of the factors of production, their rewards and mobility of the factors of production.
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Guidance
- Definitions and examples of land, labour, capital and enterprise. Examples of the nature of each factor of production. - The influences on the mobility of the various factors. - The causes of changes in the quantity and quality of the various factors. |
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1.3 Opportunity cost - syllabus aim is a knowledge and understanding of opportunity cost and the influence of opportunity cost on decision-making.
Opportunity Cost Decisions Activity - Click Here |
Guidance
- Definition and examples of opportunity cost in different contexts. - Decisions made by consumers, workers, producers and governments when allocating their resources. |
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1.4. Production possibility curve diagrams (PPC) - syllabus aim is to understand definition of PPC, points under, on and beyond a PPC, the movements along a PPC & shifts in a PPC.
PPF Workbook - Click Here |
Guidance
- Definition, drawing and interpretation of appropriate diagrams. - The significance of the location of production points. - Movements along a PPC and opportunity cost. - The causes and consequences of shifts in a PPC in terms of an economy’s growth. |
