Economics –Foundations
Sub-topic
Economics
Goods & services
SL/HL Core – Assessment Objectives
AO1 – Define “Economics”
Economics is the study of how scare resources are allocated to fulfill the infinite wants
of consumers.
AO2 – Distinguish between goods & services.
Goods are things or objects which can be given out and service is things done in order
to give out the goods.
AO2 – Distinguish between durable goods and non-durable goods.
Durable goods are things that are very strong and non-durable goods are things the are
not very sturdy.
Needs & wants
AO2 – Distinguish between needs & wants.
The wants are certain thing that people wish to have, and needs are things that people
must have to do their work.
Economic good vs.
free good
AO2 – Distinguish between economic goods & free goods.
Free goods are goods which can be given out to people without asking for money and
economic goods are goods which can be used to satisfy certain desires or needs.
AO1 – Define “Scarcity”
Insufficient for the demand.
AO1 – Define “Opportunity Cost”
The next best alternative forgone when an economic decision is made.
AO3 – Examine the relationship between opportunity cost, scarcity, and choice.
Scarcity, Opportunity
Cost & Choice
Three Economic
Questions
Four factors of
Production
Utility
Margin
Production
Possibilities Curve
AO1 – Describe with examples the three economic questions.
AO1 – Describe with examples the four factors of production.
Land- natural resources
Labor- people making the products
Capital- machinery and tools
Entrepreneurship- private investors planning the production process
AO1 – Define “Utility”
Measure of usefulness and pleasure.
AO1 – Define the term “Marginal”
The extra utility gained from consuming one more unit of that product.
AO4 – Draw a correctly labeled Production Possibilities Curve.
AO3 – Examine the relationship between the PPC and scarcity, choice, and
opportunity cost.
AO1 – Define “potential output,” and relate to PPC
How much the sector thinks its giving out
AO1 – Define “potential growth,” and relate to PPC
How much the sectors thinks its growing
AO2 – Distinguish between potential output and actual output, and relate to PPC.
AO2 – Distinguish between potential growth and actual growth, and relate to
Microeconomics vs.
Macroeconomics
Positive vs.
Normative Econ
Ceteris Paribus
Circular Flow Model
PPC.
AO2 – Distinguish between Microeconomics and Macroeconomics.
Microeconomics is an economy on a small scale and macroeconomics is a economy on
large scale
AO2 – Distinguish between Positive and Normative Economics with examples.
Positive can be checked and normative is an own opinion
AO1 – Define “Ceteris Paribus”
All other things being held equal.
AO1 – Explain the reason Ceteris Paribus is used in economic models.
When talking about changing a curve on a graph but leaving everything else the way it
is.
AO4 – Draw a correctly labeled Circular Flow Model.
http://stevenduan.files.wordpres
s.com/2010/07/circular-flowmodel1.gif, 20,09,2011
Public vs. Private
Sectors
Rationing Systems
Growth vs.
Development
AO2 – Explain the Circular Flow Model.
Households gives goods and labor to firms and firms gives money to the households.
AO3 – Distinguish between the public sector and the private sector with examples.
Public means that the company is owned or run by the community and private sector is
a private business
AO2 – Distinguish between a planned economy and a free-market economy.
Planned means that the everything is run by the government and that everything is the
same and free-market means that everyone is on their own.
AO3 – Compare and contrast the advantages and disadvantages of planned and
free-market economies.
Planned- everyone has a job, same wages, and same healthcare.
Free-market- everyone has their own job own insurance and their own and people
have to figure out their own retirement plan
AO2 – Distinguish between economic growth and economic development.
economic growth is the growth of real output in an economy over time and the econ
development is a broad concept of living improvement in standards of living
conditions.
AO1 – Define “sustainable development”
Development that meets the requirement of the present without compromising the
ability of future to meet their own needs.