ECON 101, INTRODUCTION TO ECONOMICS LATEST REVIEWED STUDY
GUIDE 2026
The 9 central concepts of economics:
- Scarcity: the fundamental economic problem of having limited resources to satisfy
unlimited wants and needs
+ Example: there's a limited supply of freshwater on Earth, but an ever-growing
demand for it in agriculture, industry, and personal use
- Opportunity cost: as a result of scarcity, we need to make choices and the option we
do not choose becomes our opportunity cost, otherwise defined as all opportunities
forgone in a decision
+ What can we do to minimize opportunity cost? A cost-benefit analysis, where
we evaluate all the benefits and costs associated with as decision, usually
takes into account factors affecting individuals as well as the economy as a
whole
- Efficiency: the optimal use of resources to achieve the maximum output or benefit
- Equity: fairness in the distribution of economic resources, opportunities, and
outcomes among individuals or groups in society
+ Example: Progressive taxation, where higher-income earners pay a larger
percentage of their income in taxes, is an attempt to promote equity
+ Equity is different from equality, as equity aims for fairness, which may
sometimes require unequal distribution to account for different needs or
circumstances
- Economic well-being: Factors contributing to economic well-being include income
levels, access to healthcare and education, job security, and work-life balance.
+ Remember that GDP per capita is often used as a measure of economic
well-being, but it doesn't capture all aspects of quality of life.
- Sustainability: the ability to maintain economic growth and development over the
long term without depleting natural resources or causing environmental damage
that could impede future growth
, + Example: Renewable energy investments are considered sustainable as they
provide long-term energy solutions without depleting finite fossil fuel
resources.
+ Exam tip: When discussing sustainability, consider the three pillars: economic,
environmental, and social sustainability.
- Interdependence: the mutual reliance between different economic factors, sectors,
or countries
+ Interdependence can lead to both increased efficiency through specialization
and increased vulnerability to external shocks. In other words, it can be both
good and bad.
- Government intervention: actions taken by the government to influence or control
various aspects of the economy
+ Common mistake: Don't assume that government intervention is always
beneficial or detrimental. Its effects can vary depending on the specific
situation and implementation.
+ Exam tip: In essays or long-form answers, try to discuss how these concepts
interact. For example, how government intervention might aim to improve
equity or promote sustainability, or how interdependence affects a country's
ability to achieve sustainable economic growth.
Factors of production
- Land, Labour, Capital & Enterprise
- Land: all natural resources (ex: oils, minerals & agriculture)
- Labour: the physical and mental effort of human workers for the production process
+ Difference between skilled & unskilled workers = professional vs physically
demanding jobs
- Capital: goods used in the creation of other goods, usually man-made (ex:
machinery, tools & equipment)
- Enterprise: the person who coordinates and bring together the other factors of
productions, involves taking risk
GUIDE 2026
The 9 central concepts of economics:
- Scarcity: the fundamental economic problem of having limited resources to satisfy
unlimited wants and needs
+ Example: there's a limited supply of freshwater on Earth, but an ever-growing
demand for it in agriculture, industry, and personal use
- Opportunity cost: as a result of scarcity, we need to make choices and the option we
do not choose becomes our opportunity cost, otherwise defined as all opportunities
forgone in a decision
+ What can we do to minimize opportunity cost? A cost-benefit analysis, where
we evaluate all the benefits and costs associated with as decision, usually
takes into account factors affecting individuals as well as the economy as a
whole
- Efficiency: the optimal use of resources to achieve the maximum output or benefit
- Equity: fairness in the distribution of economic resources, opportunities, and
outcomes among individuals or groups in society
+ Example: Progressive taxation, where higher-income earners pay a larger
percentage of their income in taxes, is an attempt to promote equity
+ Equity is different from equality, as equity aims for fairness, which may
sometimes require unequal distribution to account for different needs or
circumstances
- Economic well-being: Factors contributing to economic well-being include income
levels, access to healthcare and education, job security, and work-life balance.
+ Remember that GDP per capita is often used as a measure of economic
well-being, but it doesn't capture all aspects of quality of life.
- Sustainability: the ability to maintain economic growth and development over the
long term without depleting natural resources or causing environmental damage
that could impede future growth
, + Example: Renewable energy investments are considered sustainable as they
provide long-term energy solutions without depleting finite fossil fuel
resources.
+ Exam tip: When discussing sustainability, consider the three pillars: economic,
environmental, and social sustainability.
- Interdependence: the mutual reliance between different economic factors, sectors,
or countries
+ Interdependence can lead to both increased efficiency through specialization
and increased vulnerability to external shocks. In other words, it can be both
good and bad.
- Government intervention: actions taken by the government to influence or control
various aspects of the economy
+ Common mistake: Don't assume that government intervention is always
beneficial or detrimental. Its effects can vary depending on the specific
situation and implementation.
+ Exam tip: In essays or long-form answers, try to discuss how these concepts
interact. For example, how government intervention might aim to improve
equity or promote sustainability, or how interdependence affects a country's
ability to achieve sustainable economic growth.
Factors of production
- Land, Labour, Capital & Enterprise
- Land: all natural resources (ex: oils, minerals & agriculture)
- Labour: the physical and mental effort of human workers for the production process
+ Difference between skilled & unskilled workers = professional vs physically
demanding jobs
- Capital: goods used in the creation of other goods, usually man-made (ex:
machinery, tools & equipment)
- Enterprise: the person who coordinates and bring together the other factors of
productions, involves taking risk
