Cambridge International as and a level Economics Ebook

SELF-ASSESSMENT TASK 
3
Economic issue
Key concept
A supermarket throwing away unsold food.
Equilibrium and equity 
A school having to decide whether to build a new sports 
hall or a chemistry lab.
Progress and development
A government providing free education to children from 
poor backgrounds.
Regulation and equity
A government introducing a ban on people smoking in 
private cars.
Scarcity and choice
A car firm reducing its output of a particular model 
of car.
The margin and change
Table 5 
Economic issues and key concepts
Match each of the following economic issues with a key concept that could be used to examine it. In this activity, you 
can only use each concept for one issue but note that a particular concept may apply to more than one issue.
11
Introduction 

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Chapter 1:
Basic economic ideas and 
resource allocation
AS Level
Learning objectives
On completion of this chapter you should know:
■
what is meant by the fundamental economic problem of 
limited resources and unlimited wants
■
what is meant by scarcity and the inevitability of 
choices that have to be made by individuals, firms and 
governments
■
what is meant by opportunity cost
■
why the basic questions of what, how and for whom 
production takes place have to be addressed in all 
economies
■
the meaning of the term ‘
ceteris paribus
’
■
what is meant by the margin and decision making at 
the margin
■
the importance of the time dimension in Economics
■
the 
diff erence between positive and normative 
statements
■
what is meant by factors of production, namely land, 
labour, capital and enterprise
■
what is meant by the division of labour
■
how resources are allocated in market, planned and 
mixed economies
■
problems of transition when central planning in an 
economy is reduced
■
the characteristics of a production possibility curve and 
how opportunity cost can be applied
■
the functions and characteristics of money and types 
of money
■
how goods can be classified into free goods, 
private goods, public goods, merit goods and 
demerit goods
■
the problems associated with information failure.