Introduction to Economics
Introduction to Economics
This is the unit examiners assume you've internalised before they even get to supply and demand. Every single question — a tax on sugary drinks, a minimum wage debate, GDP growth figures — is really asking the same underlying thing: can you separate what economists can prove from what they merely believe, and can you trace a policy back to scarcity and opportunity cost? Get sloppy here and it costs you marks in units you haven't even studied yet.
Overview
Economics exists because of one uncomfortable fact: human wants are unlimited, but the land, labour, capital and enterprise available to satisfy them are not. That gap — scarcity — forces every individual, firm and government to choose. And because resources used one way can't simultaneously be used another way, every choice carries a cost: the opportunity cost, the value of the next best alternative given up.
- Economics is the social science studying how scarce resources with alternative uses are allocated among competing, unlimited wants.
- Three questions every economic system must answer: what to produce, how to produce it, and for whom.
- Economists build simplified models (using assumptions like ceteris paribus and a rational, self-interested agent) to predict how people respond to incentives — then test those predictions against real data.
- A recurring examiner distinction sits underneath almost every question in this unit: statements that can be tested against evidence (positive) versus statements that rest on a value judgement (normative).
The shape of the chapter
Command terms this unit tests hardest
| Command term | What it demands | AO | Mark-earning move |
|---|---|---|---|
| Define | Give the precise meaning of a term (e.g. 'positive economics') — no example needed unless asked. | AO1 | 1 mark for the exact meaning; adding an unrelated example wastes time, not marks. |
| Identify | State a specific statement/feature from the stimulus, e.g. pick out the positive sentence. | AO2 | 1 mark — quoting the exact clause; don't explain unless asked, it wastes time. |
| Distinguish | Give a point of difference between two concepts (e.g. positive vs normative). | AO2 | Needs BOTH sides compared directly — defining each separately without contrasting them loses marks. |
| Analyse | Break an issue into parts and show a chain of reasoning/consequences. | AO3 | Top marks need a developed chain (X leads to Y leads to Z), not a list of separate points. |
| Evaluate | Weigh strengths/weaknesses and reach a justified conclusion. | AO3 | No judgement at the end = capped in the lower mark band even if the analysis was strong. |
Key point
Overview