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IGCSE Edexcel Economics Unit 1 Notes
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Edexcel IGCSE Economics Unit 1 Notes. Easy to study notes in the order of the specification.
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ECONOMICSThe Economic Problem 1.1.1a
a.) The problem of scarcity
Explain the economic problem of scarcity. [3 marks]
Three points to be covered:
Explanation could include:
1. there are limited/finite resources and unlimited wants.
2. limited resources are used to satisfy unlimited wants.
3. in the process choices have to be made which leads to an opportunity cost.
b.) Opportunity Cost:
Define the concept of opportunity cost. [3 marks]
Definition must include the following:
1.) The (next) best alternative foregone/not taken as a result of taking a decision/making a
choice.
Because it is a 3 marks question – appropriate example of choice must be given.
Ex: At the ice cream parlour, you have to choose between rocky road and
strawberry. When you choose rocky road, the opportunity cost is the enjoyment of
the strawberry.
Economic Agents are participants in the economy that engage in specialization, production,
exchange and consumption. There are three economic agents;
1.) Producers
2.) Consumers
3.) Government
, ECONOMICS
Factors of Producton1.1.1b
These are the inputs in the production process and are used for the production of goods and
services.
Land:
All-natural resources that are locked up in the earth surface, including minerals, fossil fuels,
forests timber and oil.
Labour:
It is the physical and mental capability of manpower which consists of all skill knowledge,
energies that are provided by the working population.
Labour can be considered as the human resources available.
EX: teachers, coal miners and factory workers which include both skilled and unskilled
workers.
Capital:
Capital consists of all man – made resources, which help in the production of other goods and
services.
EX: machinery, tools
Entrepreneur:
Enterprise is the process of managing and deciding how factors of production should be used in
order to make profits.
The person who undertakes this responsibility is known as the entrepreneur. An entrepreneur is
a person who takes the risk of opening a new business (risk –taker).
, ECONOMICS
Producton Possibility Curve 1.1.1c
A production possibiliyn curve (PPC) is a curve or a boundary which shows the
combinatons of two or more goods and services that can be produced
whilst using all of the available factor resources efciently.
Economic efficiency implies an economic state in which every resource is
optimally allocated to serve each individual or entity in the best way while minimizing
waste and inefficiency.
Consumer Goods
(Pizza)
goods bought and
used by consumers,
rather than by
manufacturers for
producing other
goods.
Capital Goods
(Sugar)
goods that are used in
producing other
goods, rather than
being bought by
consumers.
What is the opportunity cost of moving from B to A?
, Positve Economic rrowth Causes
Negatve Economic rrowth Causes
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