covers all the essential basic concepts of Economics. Ideal for A Level and IB Economics students.
Topics covered scarcity, opportunity cost, factors of production, normative and positive economics
8. Production Possibility Frontiers
If itthe country is
IfIf reallocatesall
it devotes its
Assume a country
Capital Goods at point Ato two
resources capital
on the
resources (moving
can produce
round It it PPF from A
goods could
PPF the goods
can
types of maximum
to produce aproduce
B) it can
Ym
produce the goods
moreYm. resources
with consumer
of its
butcapital goods itsYo
– If only at the allof
combination
it devotes
and consumer
expense of fewer and
capital goods
Yo A resources to
capital goods. The it
goods
Xo consumer
consumer goods
opportunity cost a of
goodsproduce Xo
could
producing anof Xm
maximum extra
– X1 consumer goods
is Yo – Y1 capital
Y1 B goods.
Xo X1 Xm Consumer Goods
9. Production Possibility
Frontiers
Capital Goods
It can only produce at
Production
points outside the PPF
if it finds the PPF
inside a way of
expanding its
– e.g. point B
resources or improves
means the
Y1
C the productivity of
country is not
those resources it
already has. its will
using all This
A
.
Yo push the PPF further
resources
outwards.
B
Xo X1 Consumer Goods
11. Positive and Normative Economics
• Health care can be improved with more • Positive
tax funding Statements:
• Pollution control is effective through a – Capable of being verified
system of fines or refuted by resorting to
fact or further
investigation
• Society ought to provide homes for all • Normative
• Any strategy aimed at reducing factory Statements:
closures in deprived areas would be – Contains a value judgement
helpful which cannot be verified by
resort to investigation or
research
12. Micro & Macro economics
• The field of economics that
• The branch of economics studies the behavior of the
that analyzes the market aggregate economy.
behavior of individual Macroeconomics examines
consumers and firms in an economy-wide phenomena
attempt to understand the such as changes in
decision-making process of unemployment, national
firms and households. income, rate of growth, gross
domestic product, inflation
and price levels.
13. Economic Development
• Economic development is a measure
of welfare, a measure of well-being.
• Commonly used measure is Human
Development Index (HDI).
• Measures national income power
head, adult literary rate, average
years of schooling, life expectancy
14. Category HDI Value
High Human development .800 and above
Medium human development .500 -0.799
Low human development Less than .500
15. Sustainable Development
• Development that meets • Countries should not
the needs of the present use up resources too
without compromising the quickly and should not
ability of future harm the environment
generations to meet their since this will stop
own needs. growth taking place in
the future.
