Economics Revision Notes – sections 1+2 (+ guide)
Thank you for downloading those Revision Notes, this is the first document out of
the 3. This document will contain ways to revise for economics and section 1
notes only.
This document contains:
- Ways to revise for Economics Cambridge IGCSE and O Level
- Section 1: The basic economic problem
1. The nature of the economic problem
2. The factors of production
3. Opportunity cost
4. Production possibility curve
, Secti on 1: The basic economic problem
1. The nature of the economic problem
There's no limit to peoples wants, but there's a limit to resources
Thus the resources are scarce
Scarcity is the situation
where there are not unlimited limited
wants resources scarcity
enough resources to
satisfy everyone’s needs or wants
The basic economic problem – concern about
how best to allocate scarce resources in order to satisfy people’s needs and wants
It exists in every economy
Economics is the study of how resources are allocated to satisfy the unlimited needs and wants
Economic agents are:
o Individuals or households
o Firms
o The government
3 basic questions asked by economic agents:
o What to produce?
o How to produce it?
o For whom to produce it?
Private sector – refers to the economic sector of private individuals and firms; the main aim is to
earn profit
Public sector – refers to the activity directly involving the government; the main aim is to provide
a service
Goods – physical, tangible items
Services – non-physical, thus intangible items
Needs – goods and services which are essential for survival:
o Food
o Water
o Shelter (clothing)
Wants – goods and services which are not essential, but desired by different economic agents
Economic goods are products that require resources to produce it -> they have an opportunity
cost
A free good does not require resources to make it, this doesn’t have an opportunity cost
Thank you for downloading those Revision Notes, this is the first document out of
the 3. This document will contain ways to revise for economics and section 1
notes only.
This document contains:
- Ways to revise for Economics Cambridge IGCSE and O Level
- Section 1: The basic economic problem
1. The nature of the economic problem
2. The factors of production
3. Opportunity cost
4. Production possibility curve
, Secti on 1: The basic economic problem
1. The nature of the economic problem
There's no limit to peoples wants, but there's a limit to resources
Thus the resources are scarce
Scarcity is the situation
where there are not unlimited limited
wants resources scarcity
enough resources to
satisfy everyone’s needs or wants
The basic economic problem – concern about
how best to allocate scarce resources in order to satisfy people’s needs and wants
It exists in every economy
Economics is the study of how resources are allocated to satisfy the unlimited needs and wants
Economic agents are:
o Individuals or households
o Firms
o The government
3 basic questions asked by economic agents:
o What to produce?
o How to produce it?
o For whom to produce it?
Private sector – refers to the economic sector of private individuals and firms; the main aim is to
earn profit
Public sector – refers to the activity directly involving the government; the main aim is to provide
a service
Goods – physical, tangible items
Services – non-physical, thus intangible items
Needs – goods and services which are essential for survival:
o Food
o Water
o Shelter (clothing)
Wants – goods and services which are not essential, but desired by different economic agents
Economic goods are products that require resources to produce it -> they have an opportunity
cost
A free good does not require resources to make it, this doesn’t have an opportunity cost
