Economics: Basic Economic Concepts – Complete
Revision Notes
1. Introduction to Economics
Economics is the study of how individuals, businesses, and governments make choices to allocate
scarce resources to satisfy unlimited human wants.
2. Scarcity
Scarcity refers to the limited availability of resources compared to unlimited human wants. Because
resources are scarce, choices must be made.
3. Choice
Choice arises due to scarcity. Individuals and societies must decide what to produce, how to
produce, and for whom to produce.
4. Opportunity Cost
Opportunity cost is the value of the next best alternative forgone when a decision is made.
Example: If a student chooses to study instead of working part-time, the opportunity cost is the
income they could have earned.
5. Factors of Production
Land – natural resources
Labour – human effort
Capital – man-made tools and machinery
Entrepreneurship – risk-taking and business organization
6. Economic Systems
Traditional Economy – based on customs and traditions
Command Economy – government controls resources
Revision Notes
1. Introduction to Economics
Economics is the study of how individuals, businesses, and governments make choices to allocate
scarce resources to satisfy unlimited human wants.
2. Scarcity
Scarcity refers to the limited availability of resources compared to unlimited human wants. Because
resources are scarce, choices must be made.
3. Choice
Choice arises due to scarcity. Individuals and societies must decide what to produce, how to
produce, and for whom to produce.
4. Opportunity Cost
Opportunity cost is the value of the next best alternative forgone when a decision is made.
Example: If a student chooses to study instead of working part-time, the opportunity cost is the
income they could have earned.
5. Factors of Production
Land – natural resources
Labour – human effort
Capital – man-made tools and machinery
Entrepreneurship – risk-taking and business organization
6. Economic Systems
Traditional Economy – based on customs and traditions
Command Economy – government controls resources
