Igcse Revision
IGCSE REVISION NOTES
The basic economic problem: scarcity and exercise of choice .
igcse economics - Scarce resources & unlimited wants
This is the reason for the existence of this subject. In reality most resources are scarce. Similarly individuals and nations have unlimited wants.
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The Basics
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Scare Resources
There are only a limited number of resources such as workers, machines, factories, raw materials etc. Yet there are a number of different ways in which they could be used.
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Similarly people only have a limited amount of money. Yet they have lots of needs and wants to satisfy.
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Also the Government has a limited amount of money £440 billion !!!!. However, it is unable to satisfy all its wants.
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THE BASIC ECONOMIC PROBLEM – the problem arises because resources are scarce, but human wants are unlimited.
What is the difference between needs and wants? choice and opportunity cost
Economic choice - is deciding between different uses of scarce resources
Opportunity cost - is the benefit that is lost in making a choice between two competing uses of scarce resources. It is the next best alternative.
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Examples of Opportunity Cost
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Allocation of Resources
This is about how resources are allocated between competing uses
Examples
• Coca Cola decide to spend £50 billion on advertising • The government decides to spend £100 billion on hospitals • An individual allocates their time to study rather than playing football
igcse economics - factors of production
Factors of production are the resources of LAND, LABOUR, CAPITAL and ENTERPRISE used to produce goods and services.
LAND
Land is the natural resources on the planet. It includes space on the ground, hills, seas, oceans, air etc
LABOUR
Labour is the human input (workers, managers etc) into the production process. The UK has about 58 million people of which approximately 35 million are of working age.
Each individual has a
The basic economic problem: scarcity and exercise of choice .
igcse economics - Scarce resources & unlimited wants
This is the reason for the existence of this subject. In reality most resources are scarce. Similarly individuals and nations have unlimited wants.
[pic]
The Basics
[pic]
Scare Resources
There are only a limited number of resources such as workers, machines, factories, raw materials etc. Yet there are a number of different ways in which they could be used.
[pic]
Similarly people only have a limited amount of money. Yet they have lots of needs and wants to satisfy.
[pic]
Also the Government has a limited amount of money £440 billion !!!!. However, it is unable to satisfy all its wants.
[pic]
THE BASIC ECONOMIC PROBLEM – the problem arises because resources are scarce, but human wants are unlimited.
What is the difference between needs and wants? choice and opportunity cost
Economic choice - is deciding between different uses of scarce resources
Opportunity cost - is the benefit that is lost in making a choice between two competing uses of scarce resources. It is the next best alternative.
[pic]
Examples of Opportunity Cost
[pic]
Allocation of Resources
This is about how resources are allocated between competing uses
Examples
• Coca Cola decide to spend £50 billion on advertising • The government decides to spend £100 billion on hospitals • An individual allocates their time to study rather than playing football
igcse economics - factors of production
Factors of production are the resources of LAND, LABOUR, CAPITAL and ENTERPRISE used to produce goods and services.
LAND
Land is the natural resources on the planet. It includes space on the ground, hills, seas, oceans, air etc
LABOUR
Labour is the human input (workers, managers etc) into the production process. The UK has about 58 million people of which approximately 35 million are of working age.
Each individual has a