Economics · Scarcity, choice and opportunity cost
Explain the fundamental economic problem of scarcity.
Explain the need for individuals, firms, and governments to make choices.
Define the meaning of opportunity cost.
Explain how opportunity cost results from the need to make choices.
Explain the basic questions of resource allocation.
Understand why the fundamental economic problem of scarcity occurs.
Understand why individuals, firms and governments have to make choices because resources are scarce.
Understand that opportunity cost results from the need to make choices and is the next best alternative that is foregone.
Analyse why the fundamental economic problem requires all economies to answer three important questions: what to produce, how to produce, for whom to produce.
Students often confuse wants and needs, but needs are essential for survival while wants are desires that improve quality of life.
Students often think scarcity means there is simply not enough of something, but it specifically means there isn't enough to satisfy all human wants.
Students often think opportunity cost is all the alternatives foregone, but it is only the single next best alternative that is given up.
Students often think resources are just money, but resources include all inputs like raw materials, labour, and machinery.