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Foundation of economics

Approaches to the teaching of economics
Only topics listed in these columns will be selected for assessment in the examination papers. Where
“including” is followed by a list (for example, “Discuss the limitations of interventionist policies, including
excessive bureaucracy, poor planning and intervention”), these must be studied. However, this does not
preclude teachers going beyond that list if they so wish.
Examination questions will not exceed the demands of the command terms used in this syllabus, although
the command terms used do not prescribe the exact wording of examination questions. For further
discussion of the command terms, please see the section “Command terms” (including “Classification of
command terms”) in “Assessment objectives in practice”. See also “External assessment” and “Glossary of
command terms”.
Teachers must introduce students to the economic terms that appear in each of the four sections of the
syllabus. Students are expected to demonstrate the ability to define these economic terms. Teachers must
also introduce students to the accurate use of diagrams and appropriate use of examples.
Theory of knowledge (TOK) discussion points are included at the end of sub-sections. Teachers and their
students are encouraged to use these examples as part of their exploration of the interrelationship between
TOK and economics. See also the section “Economics and theory of knowledge” in “Nature of the subject”,
as well as the list of potential connections at the end of “The foundations of economics” below.
The foundations of economics
While there is no formal introductory section in the syllabus, teachers must introduce students to the
fundamentals of economics.
The following introduction is an example of a possible unit of work to introduce students to the economics
syllabus. However, teachers may wish to take an entirely different approach.
This unit introduces key, overarching, economic concepts that appear throughout the course. These
will be examined and assessed where they appear in the four sections of the syllabus (microeconomics,
macroeconomics, international economics and development economics).
Teaching approach
Economics as a social
Explain that economics is a social science.
Outline the social scientific method.
Explain the process of model building in economics.
Explain that economists must use the ceteris paribus assumption
when developing economic models.
Distinguish between positive and normative economics.
Examine the assumption of rational economic decision-making.
Explain that scarcity exists because factors of production are finite
and wants are infinite.
Explain that economics studies the ways in which resources are
allocated to meet needs and wants.
Explain that the three basic economic questions that must be
answered by any economic system are: “What to produce?”, “How
to produce?” and “For whom to produce?”
Economics guide
Approaches to the teaching of economics
Teaching approach
Choice and opportunity
Explain that as a result of scarcity, choices have to be made.
Explain that when an economic choice is made, an alternative is
always foregone.
Explain that a production possibilities curve (production
possibilities frontier) model may be used to show the concepts of
scarcity, choice, opportunity cost and a situation of unemployed
resources and inefficiency.
Explain that the economics course will focus on several themes,
which include:
Central themes
the extent to which governments should intervene in the
allocation of resources
the threat to sustainability as a result of the current patterns
of resource allocation
the extent to which the goal of economic efficiency may
conflict with the goal of equity
the distinction between economic growth and economic
The following list gives examples of theory of knowledge discussion points that teachers may use with
students as part of this unit of work. The list is not intended to be either prescriptive or exhaustive.
Economics guide