1.1 The nature of the economic problem
Topic
1.1.1 finite resources and unlimited wants
1.1.2 economic and free goods
Guidance
Definition and examples of the economic problem in the contexts of: consumers; workers; producers; and governments.
The difference between economic goods and free goods.
1.2 The factors of production
Topic
1.2.1 definitions of the factors of production and their rewards
1.2.2 mobility of the factors of production
1.2.3 quantity and quality of the factors of production
Guidance
Definitions and examples of land, labour, capital and enterprise. Examples of the nature of each factor of production.
The influences on the mobility of the various factors.
The causes of changes in the quantity and quality of the various factors.
1.3 Opportunity cost
Topic
1.3.1 definition of opportunity cost
1.3.2 the influence of opportunity cost on decision making
Guidance
Definition and examples of opportunity cost in different contexts.
Decisions made by consumers, workers, producers and governments when allocating their resources.
1.4 Production possibility curve (PPC) diagrams
Topic
1.4.1 definition of PPC
1.4.2 points under, on and beyond a PPC
1.4.3 movements along a PPC
1.4.4 shifts in a PPC
Guidance
Definition, drawing and interpretation of appropriate diagrams.
The significance of the location of production points.
Movements along a PPC and opportunity cost.
The causes and consequences of shifts in a PPC in terms of an economy’s growth.
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