Course Content
Study Resources
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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.
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Scarcity, choice and opportunity cost
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Economic methodology
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Factors of production
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Resource allocation in different economic systems
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Production possibility curves
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Classification of goods and services
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The price system and the microeconomy
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Government microeconomic intervention
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The macroeconomy
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Government macroeconomic intervention
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International economic issues
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CAIE Alevel Economics (AS)
Content

  • Consumption: the process by which consumers satisfy their wants.
  • Production: the process of creating goods and services in an economy
  • Consumers – maximum satisfaction.
  • Producers – maximum profit.
  • Governments – maximum benefits.
  • The need to make choices at all levels for individuals, firms, and governments in light of scarcity is a fact of life.
    • At the individual level, people have to decide what to spend their money on and how to allocate their time.
    • Firms have to decide what products to produce and how to allocate their resources.
    • Governments have to decide what policies to pursue and how to raise revenue.

  • Opportunity cost: the value of the best alternative forgone when making an economic choice

  • What to produce refers to the specific goods and services that a society produces.
  • How to produce refers to the specific methods used to produce those goods and services.
  • For whom to produce refers to the distribution of those goods and services among the members of society.
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