IGCSE Economics Unit 1 class notes. Provided by A Star Student and double checked by IB students. Chapters include Basic Economic Problem, Factors of Production, Opportunity Cost and PPC.
Unit 1 – The Basic Economic Problem
Chapter 1 - The nature of the economic
problem
People can’t get all their wants fulfilled due to a lack of
resources. Resources are factors used to produce goods
and services.
The economic problem – unlimited wants exceeding finite
resources. This problem arises due to a situation where
there is not enough to satisfy everyone wants. This
situation is known as scarcity.
Wants = In economics a want is something that is desired.
A person has unlimited wants but due to limited resources
all these wants are not fulfilled. For example, designer
clothes.
Needs = In economics needs are seen as a necessity for
example food.
Scarcity continues to exist. With growing populations,
wants grow at a faster rate than the growth of economic
resources.
Economic Goods = A product which requires resources to
produce it and therefore has an opportunity cost (the best
alternative forgone) of production.
,Free Goods = A product which does not require any
resources to make and therefore doesn’t have an
opportunity cost of production.
Chapter 2 – Factors of Production
Factors of Production – Land, labour, capital and
enterprise.
• Land – Gifts of nature available for production.
• Labour – Human effort used in producing goods and
services.
• Capital – Human made goods used in production
• Enterprise – Risk bearing and key decision making in
business.
Important Note – Roads aren’t an example of land. Only
natural things such as animals or grasslands or even
oceans are examples of land.
Capital Goods = Goods not wanted for their own sake but
for what they can produce.
Consumer Goods = Goods and services purchased by
households for their own satisfaction.
o Occupation Mobility = How capable a
factor of production is in changing use. o
, Geographical Mobility = How capable a
factor of production is in changing its
geographical location.
Land – Most land is occupationally mobile meaning it can
be used for a number of purposes. A farmland can be
used to raise cattle, harvest corn, etc.
Land is mostly geographically immobile. It is not possible
to move a farmland from USA to Saudi Arabia but it is
possible to divert the course of a river.
Quality of land – There are a number of reasons where
quality of natural resources may increase. Fertilisers may
increase the fertility of the land. Purification of rivers may
encourage growth of wildlife.
Quantity of land – The amount of physical land will not
change with time. Land reclamation may increase the
quantity of land and due to soil erosion the quantity of
land lowers.
Labour – Mobility of labour varies. Some workers may feel
geographically immobile. This may be due to family ties
discouraging them to leave their family and go to a new
region. Lack of information may cause workers to be
geographically immobile as they may stay in one place
without knowing any job opportunities in foreign regions.
Disparity in income may also make workers hesitant to
take up jobs in richer neighbourhoods due to a higher
cost of living. Restrictions on the movement of workers
may also lead to labour geographical immobility. Some
workers may be occupationally immobile. This may be
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller shivchauhan. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.09. You're not tied to anything after your purchase.
