Cambridge International as and a level Economics Ebook

1
Summarise the main projected changes in the age 
composition of China’s population between 2010 
and 2050.
2
Suggest the likely eff ects of these changes on 
decisions concerning:
a
what to produce
b
how to produce
c
for whom to produce.
Scarcity and choice: 
It should now be clear that 
China is facing a serious economic problem brought 
about by an ageing population. Serious choices 
have to be made. There are competing uses for 
scarce resources since even in China, not all wants 
can be met.
KEY CONCEPT LINK
Figure 1.2 
China’s rapidly ageing population
80
80
100+
65+
Age
0
40
40
0
Male
Female
Population (millions)
2010: 
1.34 billion
Aged 65+
110 million
80
80
100+
65+
Age
0
40
40
0
Population (millions)
Male
Female
2050: 
1.3 billion
Aged 65+
331 million
17
Chapter 1: Basic economic ideas and resource allocation

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Over the course of studying Economics at AS and at 
A Level there will be many occasions where this concept 
is used to further understanding of the otherwise complex 
processes that are operating. For example, in the next 
chapter, a change in the price of a good is analysed on the 
assumption that all other things that aff ect the quantity 
demanded remain the same, i.e., 
ceteris paribus
. Th
is is 
clearly a simplifi cation, since in practice there are many 
things as well as price that determine how much of a good 
is purchased when its price falls.
The margin
Like 
ceteris paribus
, this is another tool that is used by 
economists to simplify a situation. Many aspects of 
microeconomics involve analysing decisions ‘at the margin’. 
By this we mean that a small change in one economic 
variable will lead to further (small) changes in other 
variables. Looking at things in this marginal way is a means 
of being able to predict what the impact of change might 
be. For example, later on in this chapter, this idea is used to 
assess the eff ects of a change in the production possibilities 
for an economy.