1.

Grasp the concept of ‘Economics’ as a social science and demonstrate an

understanding of scarcity.

1.1 Define Economics.

1.2 Distinguish between microeconomics and macroeconomics.

1.3 Define an economic system and discuss the two major questions in an economy.

1.4 Demonstrate an understanding of the world’s basic economic problem.

1.5 Explain the concepts of scarcity, choice, and opportunity costs.

1.6 Understand the key ideas that define the economic way of thinking.

1.7 Explain why economics is a social science subject.

1.8 Distinguish between positive and normative statements.

1.9 Explain a graph and its significance in establishing relationships between variables.

2. Demonstrate an understanding of scarcity, choice, and opportunity cost.

2.1 Define the term ‘Production Possibilities Frontier’ and the ability to calculate opportunity
cost.

2.2 Distinguish between production possibilities and preferences and describe the efficient
allocation of resources.

2.3 Understand how specialisation and trade expand production possibilities.

2.4 Describe how economic institutions coordinate decisions.

3. Distinguish between the concepts of demand and supply in a competitive goods
market and demonstrate a clear understanding of market equilibrium and the factors
influencing equilibrium.
3.1 Understand the term ‘competitive markets’.

3.2 Define the law of demand, understand the difference between demand and quantity
demanded, and describe the factors that influence demand.

3.3 Define the law of supply, understand the difference between supply and quantity
supplied, and describe the factors that influence supply.

3.4 Understand and define economic concepts such as ‘equilibrium’ and ‘ceteris paribus’;
explain how demand and supply determine prices and quantities being bought and sold.

3.5 Utilise demand and supply functions to make predictions about changes in prices and
quantities.

4 Demonstrate a clear understanding of the concept of ‘elasticity’ and distinguish

between the various forms of elasticity, and how these forms are relevant in everyday
life..

4.1 Define price elasticity of demand and supply.

4.2 Define, calculate, and explain the factors influencing the price elasticity of demand.

4.3 Define, calculate, and explain the factors influencing the cross-price elasticity and
income elasticity of demand.

4.4 Define, calculate, and explain the factors influencing the supply of demand.

.1 Explain the relationship between demand and marginal benefit and define the term
‘consumer surplus’.
5. Grasp the relationship between demand and marginal benefit, as well as between
supply and marginal cost in order to understand how markets appropriate resources
efficiently.

5.2 Explain the relationship between supply and marginal cost and define the term ‘producer
surplus’.

5.3 Explain how markets move resources to their highest value uses and identify the sources
of inefficiencies in an economy.

6. Demonstrate an understanding of how government intervention in the form of

regulated prices and taxation leads to market failures.

6.1 Differentiate between price ceilings and price floors.

6.2 Explain how housing markets and labour markets function, and how these markets may
cause economic inefficiencies.

6.3 Explain how taxes cause economic inefficiencies.

6.4 Explain how the elasticity of demand and supply influence the overall tax incidence on
buyers and sellers.

7. Demonstrate a clear understanding of how consumers attempt to maximise utility

given their constrained resources by means of marginal utility analysis.
7.1 Understand and explain the consumption limits which households face.

7.2 Describe preferences using the concept of utility and distinguish between total utility and
marginal utility.

7.3 Explain the marginal utility theory of consumer choice.

7.4 Use marginal theory to predict the effects of price and income changes.

7.5 Explain the paradox of value.

8. Demonstrate a clear understanding of how consumers attempt to maximise utility

given their constrained resources by means of a budget line and indifference curves.
8.1 Describe a budget line and understand how price and income changes affect the budget
line.

8.2 Understand and explain the concept of an ‘indifference curve’ and explain the principle of
diminishing marginal rate of substitution.

8.3 Make predictions of the effects of price and income changes on consumption choices.

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9. Demonstrate a clear understanding of the relationship between a firm’s outputs,
employed resources and associated costs in both the short and long run.

9.1 Distinguish between the economic short and long run.

Short run – resources used in production are fixed. The capital formation (firms’ factory) is
fixed in short run. Long run – quantities of all resources can vary. The capital formation
(firms’ factory) is varied in long run.

QUESTIONS

1. True or False - Interest charged on a bank loan for new equipment can be regarded as a
variable cost in the short run.

2. The short run is characterised by __________.

o a period of one year

o average fixed cost staying constant over the range of output

o the fact that the law of diminishing return does not hold

o the fact that at least one fixed factor of production does not change

9.2 Explain the relationship between a firm’s output and labour employed in the short
run.

Total product curve - Indicates how the total product changes with the quantity of labour
employed. It separates attainable output levels from unattainable output levels in the short
run. Total product is the total amount produced. Marginal product is the change in total
product that results from a one-unit increase in labour.

Marginal product curve

Increasing marginal returns
Increasing marginal returns arise from increased specialisation and division of labour.
Diminishing marginal returns.
Marginal product increases to a maximum (in this example, when the second worker is
employed) and then declines – diminishing marginal product.
Average product curve - When marginal product is below average product, average
product decreases. When marginal product equals average product, average product is at
its maximum. With one worker per day, marginal product exceeds average product, so
average product is increasing.
9.3 Explain the relationship between a firm’s output and its costs in the short run and
derive the firm’s short-run cost curves.

9.4 Explain the relationship between a firm’s output and its costs in the long run and
derive the firm’s long-run cost curve.
10. Discuss the underlying principles of perfect competition and explain how a
perfectly competitive firm maximises economic profit.

10.1 Define the term ‘perfect competition’.

10.2 Explain how firms make decisions on supply and why they might shut down temporarily.

10.3 Explain how market price and output are determined and what causes firms to enter
and exit certain industries.

10.4 Predict the effects of changes in demand or technological improvements.

10.5 Explain why perfect competitive markets are efficient.

11. Discuss the underlying principles of a monopoly and explain how a monopolistic
firm maximises economic profit

11.1 Explain how a monopoly arises.

11.2 Distinguish between a single-price monopoly and a price-discriminating monopoly.

11.3 Compare the performance and efficiency between a monopoly and a perfect
competitive market.

11.4 Explain how price discrimination can increase a monopolist’s profits.

11.5 Explain how the regulation of a monopoly will influence its price, output, profit, and
efficiency.

12. Discuss the underlying principles of monopolistic competition and explain how a
monopolistically competitive firm maximises economic profit.

12.1 Define and explain monopolistic competition.

12.2 Explain how price and output are determined under monopolistic competition.

12.3 Define and explain an oligopoly.

13. Understand the markets for factors of production.

13.1 Describe, analyse, illustrate, and explain oligopoly.

13.2 Describe factor markets and incomes.

13.3 Analyse the demand for labour.

13.4 Analyse the supply of labour.

13.5 Analyse, explain, and illustrate labour market equilibrium.

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