IGCSE Economics Introduction to Economics at IGCSE What is Economics? Why do we study it?

TASK: Thinking about choices Imagine you are at this famous jakarta shopping mall You have 200,000 rp. You have two hours of time What will you do?

Scarcity and Choice This is the reason for the existence of this subject. In reality most resources are scarce. Similarly individuals and nations have unlimited wants.

Scarce Resources There are only a limited number of resources such as workers, machines, factories, raw materials etc. Yet there are a number of different ways in which they could be used. What are the different ways we could use water?

Scarcity and choice people only have a limited amount of money. Yet they have lots of needs and wants to satisfy.

Scarcity and choice Also the Government has a limited amount of money £440 billion !!!!. However, it is unable to satisfy all its wants.

The Basic Economic Problem THE BASIC ECONOMIC PROBLEM – the problem arises because resources are scarce, but human wants are unlimited. Write a list of things the government provides Which are more important than others? What is the difference between a need and a want?

Scarcity Are the following items wants or needs for you? Food TV Healthcare Education Military Drink PS3 Shelter Car Clothing

Scarcity Can you think of 5 items that are very scarce? What tends to be the price level of these items? Is there anything that is not at all scarce? Try to list at least 3 What is the price level of each?

3 Basic questions So economics is fundamentally about allocating scarce resources. What do you think the 3 basic questions that economists try to answer would be? Fundamental Questions of Economics - Scarcity requires all societies to answer the following questions: What is to be produced? How is to be produced? For whom will it be produced?

Economic Activity Consider your own household economy What is produced by your household? (eg: cooking, cleaning, accommodation, transport) How is production organised? (eg: who cooks, who cleans, what equipment is needed, when is it done?) For whom does production take place? Do you think your household production should be organised in a different way? Justify your answer.

3 Basic Questions How do different countries try to answer these questions? With the country you have been given, write a note stating how you think they answer each question Compare your answers with your neighbour. Do you agree?

Who should provide for the wants and needs in the economy? Look at the cards you have been given Who provides these goods and services? Should it be provided by the private or public sector? Organise the cards into two groups Rank them in order of importance What other services are essential, do you think?

How do we choose what should be produce? We can use a Production Possibilities Curve, or Frontier This shows the opportunity cost of producing one thing over another Can we produce more of every item? Are we always being as efficient as we can be? Look at this videovideo Defence / Healthcare debate

Quiz How much does the product cost? the painting was assessed, for insurance purposes, as valued at $100 million $100 million in 1962 is approximately $700 million in 2009 when adjusted for inflation Why?

Quiz What is the average price of this product? $ per litre How much is this product? $1.00 per litre Why the difference? g/bottledwater/ g/bottledwater/