Topic One (1.1): Scarcity, Choice and Opportunity Cost

Introduction Icon.png Introduction

In this topic you will learn to explain the fundamental economic problem of scarcity which means that individuals, firms and governments must make choices. The need to make choices leads to the concept of opportunity cost. You will then learn the basic question of resource allocation.

Skills Icon.png Task

Economics in Context

  • Read the article on page 3 of the textbook and think what you could do to reduce your carbon footprint in order to combat climate change. Some examples might be to eat less meat and to source your wants and needs locally and so on.
  • Further guidance and suggested answers can be found in the digital textbook and in General Resources.

Watch Icon.png Watch

  • Now watch these videos, which explain the fundamental economic problem, opportunity cost and what, how and for whom to produce, and make notes.
  • The second of these videos provides an introduction to economic resources and the factors of production which are covered in more depth in Topic 1.3.

WATCH – Scarcity and Choice (YouTube) Links to an external site.

WATCH – The Economic Problem (Scarcity and Choice) (YouTube) Links to an external site.

Read & Make Notes Icon.png Read and Make Notes

Read and supplement your notes from the following sections of the textbook on pages 3 to 5:

    • 1.1 The fundamental economic problem;
    • 1.2 Unlimited wants;
    • 1.3 Choice and opportunity cost;
    • 1.4 What to produce, how to produce and for whom to produce?

Glossary Icon.png Glossary

Highlight any new terminology on your glossary.

Skills Icon.png Task

Think Like an Economist

  • Read and complete the ‘Think like an Economist’ task on page 6 of the textbook.
  • Suggested answers can be found in the digital textbook and in General Resources.

Consolidate Icon.png Consolidate

  • Please now have a go at the exam-style questions on page 7 of the textbook.
  • Suggested answers can be found in the digital textbook and in General Resources.

Reflect Icon.png Reflect

  • Draw up a table like the one on page 8 of the textbook and complete the self-evaluation.
  • If there are any areas about which you are unsure, please go back over your notes, the textbook and the resources listed in this topic before moving on.