Introduction to IGCSE Economics

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Introduction to IGCSEEconomics
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The Economic problem

• The study of how society decides
• What
• How
• For whom .. to produce.
• It is also about incentives and choice. What
• will happen if I do X instead of Y?

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Economics Deals with Factors of Production and
scarce resources

• Land
• Labour
• Capital
• Enterprise
• The key to is to realise that all resources are
  scarce and have to be rationed in some way
• One course of action involves the theory of
  opportunity cost.

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The price of oil
Tripled in 1973-74, and doubled again in 1979-80
affecting people all over the world. Now
various unrelated events (known as an Economic
shock) are driving prices up to record
highs. Supply side shocks include ..
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An Economic Shock affects ..

• What to produce
• less oil-intensive products - smaller cars and
  Hybrids!
• How to produce
• less dirty production - change from coal to
  wind power.
• For whom to produce
• All producers supply to those who can afford it!

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The distribution of world population and GNP - 21
Century
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Scarcity means choices

• Opportunity cost is a crucial concept in economic
  analysis.
• the quantity of other goods that must be
  sacrificed to allow X to take place.

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The operation of markets

• Market is a shorthand expression for the process
  by which ..
• households decide about consumption of
  alternative goods
• firms decisions about what and how to produce
• and workers decisions about how much and for
  whom to work.
• Governments whoc control the Macro economy.
• All decisions are all reconciled by adjustment of
  prices

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Resource allocation

• Crucial for society and is handled in different
• ways in different societies, e.g
• Command economy
• Mixed economy
• Free market economy

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Market orientation
USA
China
Sweden
Hong Kong
Hungary
UK
Cuba
Free market economy
Command economy
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Normative and Positive Economics

• Positive economics deals with objective
  explanation
• e.g. if a tax is imposed on a good its price will
  tend to rise
• Normative economics offers prescriptions based on
  value judgements - opinion
• e.g. a tax SHOULD be imposed on tobacco to
  discourage smoking

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Micro and Macro

• Microeconomics
• offers a detailed treatment of individual
  economic decisions about particular commodities
• Macroeconomics
• emphasizes the interactions in the economy as a
  whole

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• Economics is the study of how individuals and
• society use finite resources to maximise their
  life
• experience.
• Mr. Goff
• 10 Sept. 2005