Economics: how people use scarce resources to meet needs and wants.
Why economics is a social science
It studies people
How people and firms choose, buy, work and save.
People are not atoms
They change their minds, copy others and react to news.
No lab
Economists cannot rerun a recession, so they use models and data.
The points to remember
- Economics is a social science: it studies people, not things.
- Its findings are less certain than physics: people react.
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Economists look at the economy at two levels.
Microeconomics
- Single markets, firms and households.
- The price of coffee, a café's costs.
- Unit 2 of the course.
Macroeconomics
- The whole economy.
- Unemployment, inflation, growth.
- Units 3 and 4.
The points to remember
- Micro: one market. Macro: the whole economy.
- A rise in the price of coffee is micro; a rise in all prices is macro.
Practice with exam-style questions
Answer exam-style questions and get AI feedback that shows you exactly what examiners want to see in a full-marks response.
Nine ideas run through every unit of the course. Use them to connect your answers.
The nine concepts
| Concept | In one line |
|---|---|
| Scarcity | Resources are limited; wants are not |
| Choice | Scarcity forces us to choose |
| Efficiency | Making the most of scarce resources |
| Equity | Fairness in who gets what |
| Economic well-being | How well people live: income, health, security |
| Sustainability | Meeting today's needs without harming the future |
| Change | Economies never stand still |
| Interdependence | Every decision affects others |
| Intervention | Governments step into markets |
Standard Level Paper 2 asked this in May 2023, for 2 marks; it can appear at Higher Level too.
The government wants farming to become more sustainable.
Define the term sustainability.
Model answer plan
See the answer broken into clear points, with guidance on how each point earns marks.
What earns each mark
1 mark
Only part of it: using resources for the long term, or less damage to nature.
2 marks
Today's needs met without harming the ability of future generations to meet theirs.