CAMBRIDGE

I N T E R N AT I O N A L

AS ECONOMICS
IMPORTANT INFORMATION
CAMBRIDGE EXAMS AS LEVEL
 BA S I C E C O N O M I C
IDEAS & RESOURCE
A L LO C AT I O N

CHAPTER 1
OBJECTIVES
1. Explain the fundamental economic problem.

2. Define scarcity and analyse the inevitability of choices at all levels,

Opportunity cost.

3. Define “Ceteris paribus”

 THE FUNDAMENTAL
ECONOMIC PROBLEM

Human wants are unlimited but resources are scarce

KEY WORDS TO FOCUS Inputs for production
of goods and services

Resources

Land Factors of Capital

production

Labour Enterprise
KEY WORDS TO FOCUS
Resources Wants

Inputs for production of Needs that are not always

goods and services realised

Scarcity Choice

A situation in which wants and needs are in The concept that resources are scare so
excess of the resources available. choices have to be made by consumers,
firms and governments.
 CHOICE
Similarly, people and governments only have a limited amount
of money but have many needs and wants to satisfy

Individual Government

$100bn
$100

Food? Entertainment?
Defence? Health care?
Clothing? Roads?
CHOICE GIVES RISE TO OPPORTUNITY COST
 OPPORTUNITY COST
The cost expressed in terms of the best alternative that is forgone.
 What Is Ceteris Paribus?
Ceteris paribus, literally "holding other things constant,"
is a Latin phrase that is commonly translated into English as
"all else being equal."
We are going to have a great year
learning together!