Chapter 02: Scarcity & Choice
Explainer, notes, worksheet and data.
Explainer
What you must be able to do
- Explain scarcity, choice and opportunity cost with real examples.
- Draw and interpret a PPC (and shifts of PPC).
- Apply economic thinking to everyday decisions (trade-offs).
Core ideas
Economics studies how people, firms and governments make choices when resources are limited. The key is trade-offs: choosing more of one thing usually means giving up something else.
Exam focus
Exam questions are usually centred around ideas like opportuninty costs, cost-benefit analysis and the production possibility frontier (PPF). Questions on these concepts can require you to think a little outside the box, so your understadning should be strong. It won't be enough to tojust know the definitions.
Interactive: Production Possibility Curve
The PPC shows the maximum combinations of two goods an economy can produce using all available resources efficiently. Click anywhere on the diagram to classify a production point. Use the slider to shift the curve.
Click anywhere on the canvas to drop a point and see its classification. Drag the slider right to simulate economic growth (outward shift).