Igcse Economics Notes
IGCSE ECONOMICS NOTES
The economic problem (Ch. 1)
- All materials on the earth (resources) are scarce (scarcity).
- Resources are used to make goods and services.
- Some resources like air are free.
- All people have basic needs to survive i.e. food, air, water and shelter. - People want more than they need .
- Wants are unlimited.
- The economic problem is how to decide the allocation of scarce resources to meet unlimited wants.
- Scarce resources have many alternative uses.
- The cost of choosing between goods and services (as all our wants cannot be met and we have to decide on a choice) is known as opportunity cost.
- Opportunity cost is the benefit you would have received from the next best alternative. - When choices are made in society there will a conflict of interests as not everyone will be satisfied with the decision made e.g. new road for motorists takes away land that could have been used by farmers.
Specialisation and exchange (Ch. 2)
- An economy is an area in which people make goods and services.z
- An economy usually comprises two main sectors i.e. the public sector and the private sector
- The private sector is all individuals plus the businesses and organisations owned by the general public
- The public sector is controlled by the government
- Production is any activity that meets people's wants i.e. the production of goods and services
- Consumption is the use of these goods and services
- Consumption expenditure is the amount spent on the use of goods and services - Very few people can make all the things they want so they must rely on trade or exchange-goods, services or money are exchanged between people or businesses - The making of goods is known as production-scarce resources required to make goods are known as factors of production. Factors of production are input into a process from where a good (output) emerges
There are four factors of production:
1-land 2-labour 3-enterprise 4-capital
The four factors
The economic problem (Ch. 1)
- All materials on the earth (resources) are scarce (scarcity).
- Resources are used to make goods and services.
- Some resources like air are free.
- All people have basic needs to survive i.e. food, air, water and shelter. - People want more than they need .
- Wants are unlimited.
- The economic problem is how to decide the allocation of scarce resources to meet unlimited wants.
- Scarce resources have many alternative uses.
- The cost of choosing between goods and services (as all our wants cannot be met and we have to decide on a choice) is known as opportunity cost.
- Opportunity cost is the benefit you would have received from the next best alternative. - When choices are made in society there will a conflict of interests as not everyone will be satisfied with the decision made e.g. new road for motorists takes away land that could have been used by farmers.
Specialisation and exchange (Ch. 2)
- An economy is an area in which people make goods and services.z
- An economy usually comprises two main sectors i.e. the public sector and the private sector
- The private sector is all individuals plus the businesses and organisations owned by the general public
- The public sector is controlled by the government
- Production is any activity that meets people's wants i.e. the production of goods and services
- Consumption is the use of these goods and services
- Consumption expenditure is the amount spent on the use of goods and services - Very few people can make all the things they want so they must rely on trade or exchange-goods, services or money are exchanged between people or businesses - The making of goods is known as production-scarce resources required to make goods are known as factors of production. Factors of production are input into a process from where a good (output) emerges
There are four factors of production:
1-land 2-labour 3-enterprise 4-capital
The four factors