Course Content
Basic economic ideas and resource allocation
Candidates will explore the fundamental problem that underpins economics and a model highlighting some of the main issues that arise from this problem. They will examine the factors of production, their rewards and the advantages and disadvantages of specialisation in the use of resources. Candidates will assess the different economic systems that are used to allocate scarce resources, considering the strengths and weaknesses of these systems, and they will be introduced to some of the terms and methodology used by economists. The key concepts that are the main focus for this topic are: scarcity and choice; the margin and decision-making; time.
CAIE Alevel Economics (AS)

The shape of the PPC is determined by the concept of opportunity cost.

  • The slope of the PPC at any point represents the opportunity cost of producing one more unit of the good on the horizontal axis.

  • Constant opportunity cost PPC is a straight line, which represents that the opportunity cost of producing one good is always the same.

  • Increasing opportunity cost PPC is bowed outward from the origin, which represents that the opportunity cost of producing one good increases as more of it is produced.
    • reflect decreasing return to scale

  • Causes of shift
    • New resources, e.g. new mine


    • Increased labour supply, e.g. more immigrants


    • Improvements in human capital, e.g. better education


    • Improved resource management


    • Privatisation
  • Pivots: one product's technology improves

  • Points inside the curve indicate unemployment and points on the curve show full employment.
    • too much waste in production
    • some resources not used
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