Topics
Economics as a Social Science
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Explain that economics is a social science.
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Outline the social scientific method.
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Explain the process of model building in economics.
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Explain that economists must use the ceteris paribus assumption when developing economic models.
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Distinguish between positive and normative economics.
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Examine the assumption of rational economic decision-making.
Scarcity
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scarcity exists because factors of production are finite and wants are infinite.
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economics studies the ways in which resources are allocated to meet needs and wants.
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the three basic economic questions that must be answered by any economic system are: “What to produce?”, “How to produce?” and “For whom to produce?”
Choice and Opportunity Cost
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as a result of scarcity, choices have to be made.
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when an economic choice is made, an alternative is always foregone.
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a production possibilities curve (production possibilities frontier) model may be used to show the concepts of scarcity, choice, opportunity cost and a situation of unemployed resources and inefficiency.
Central Themes
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the extent to which governments should intervene in the allocation of resources
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the threat to sustainability as a result of the current patterns of resource allocation
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the extent to which the goal of economic efficiency may conflict with the goal of equity
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the distinction between economic growth and economic development.
