IGCSE/O-Level REVISION NOTES The basic economic problem: scarcity and ...

IGCSE/O-Level REVISION NOTES

The basic economic problem: scarcity and exercise of choice .

StudyGuide.PK O-Level/IGCSE Economics Revision Notes

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ig c s e e c o n o m i c s - 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.

The Basics

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.

StudyGuide.PK O-Level/IGCSE Economics Revision Notes

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Similarly people only have a limited amount of money. Yet they have lots of needs and wants to satisfy.

Also the Government has a limited amount of money ?440 billion !!!!. However, it is unable to satisfy all its wants.

StudyGuide.PK O-Level/IGCSE Economics Revision Notes

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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.

Examples of Opportunity Cost

StudyGuide.PK O-Level/IGCSE Economics Revision Notes

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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

StudyGuide.PK O-Level/IGCSE Economics Revision Notes

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