What you’ll learn5 learning objectivesChoose one objective for a focused lesson, or study the complete topic.1.1.1Economics as a social science• Economics studies social choices about resource use and economic well-being• Microeconomics studies individual markets; macroeconomics studies whole economies• The nine key concepts provide the lens for analysing economic decisionsSyllabus objective1.1.2The problem of choice• Factors of production are land, labour, capital, and entrepreneurship• Scarcity exists because unlimited needs and wants face limited resources• Scarcity creates opportunity cost, trade-offs, and sustainability challenges• Free goods do not require opportunity cost in the same way as scarce economic goodsSyllabus objective1.1.3Basic economic questions and systems• Societies decide what and how much to produce, how to produce, and for whom to produce• Answers differ across free market economy, planned economy, and mixed economy systems• Market versus government intervention provides different ways to allocate resourcesSyllabus objective1.1.4Production possibilities curve model• PPC shows scarcity, choice, opportunity cost, unemployment of resources, efficiency, actual growth, and growth in production possibilities• Opportunity cost can be increasing or constant depending on model assumptions• Diagram: PPC illustrating choice, opportunity cost, unemployment, actual growth, and growth in production possibilities• Diagram: PPC showing increasing versus constant opportunity costSyllabus objective1.1.5Circular flow of income model• Circular flow shows interdependence between households, firms, government, banks, financial sector, and foreign sector• Leakages and injections affect the flow of income in an economy• Diagram: circular flow of income model with leakages and injectionsSyllabus objective
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