Summary Economics: EDEXCEL IGCSE MICRO NOTES Commercestudy

Edexcel economics igcse micro notes 1. Economic Problems 1. What is economics? A social science studies the behavior of individual organization/the-entire economy. 2. Why do we study economics? Because there is a basic economic problem which has risen due to the scarcity of resources. 3. Define the following: • Wants: people’s desire towards good/service • Need: basic requirements needed for human survival • Scarcity: When we are unable to fulfill our unlimited wants from limited sources. • Opportunity Cost: It is the next best alternative foregone when making a decision.  The opportunity cost of choosing to study IGCSE Economics is another IGCSE subject you could be studying instead.  The opportunity cost of building an additional airport terminal is using the same government funds to build public housing for low-income families.  The opportunity cost of a school purchasing 100 laptops for use in classrooms might be the science equipment that could not be bought as a result. 4. What is the basic economic problem? ‘Scarcity arises because resources are finite in order to fulfill infinite/unlimited wants of consumers. (It is because resources are scarce but human wants are unlimited.) It’s concerned with how best to allocate scarce resources in order to satisfy peoples unlimited needs/wants. It has three fundamental questions: 1. What to produce? What goods/services should be produced? 2. How to produce? Methods/process on how it should be produced 3. Whom to produce? Which econ agent receives these, individual, firms, government? 5. What is the PPC? It shows the diff combinations of 2 goods that can be produced if all resources in the country are fully used. What are the key assumptions of the ppc model? • Country can only produce 2 types of goods • Country’s technology is constant at the given time What is the usefulness of the PPC model? Its used to illustrate the concept of • Scarcity • Opportunity cost • Inefficiency • Economic growth/recession