There are 9 Key Concepts-WISE CHOICES

1. Scarcity : available resources (land, labour, capital, entrepreneurship) are limited whilst human wants are
unlimited. Thus, we cannot produce everything that people need and want. This leads to the 3 key economics
questions: What and how much to produce? How to produce? For whom to produce?

2. Choice : Economics is a study of choices, or selecting among alternatives, due to the problem of scarcity.
Households, firms, workers, governments all make choices. Choices lead to opportunity costs, which are trade-
offs. The consequences of such choices, present and future, is studied in economics.

3. Efficiency : Economic efficiency involves making the best possible use of scarce resources to avoid waste; may
refer to producing at the lowest possible cost, or producing what consumers most want – Productive Efficiency
and Allocative Efficiency respectively.

4. Equity: condition of fairness (not the same as ‘equality’, which may not be fair). Often used in connection with
income distribution and the distribution of goods and services. Mostly concerned with ensuring that everyone can
fulfill basic human needs. Fairness is a value judgment – normative statement.

5. Economic well-being: refers to levels of consumption and standard of living among the residents of a country.
May be split into material and non-material well-being.

6. Sustainability: refers to maintaining the ability of the environment and the economy to continue to produce and
satisfy needs and wants for future generations; being able to meet the needs and wants of the present generation
without reducing the ability to meet the needs and wants of future generations. Depends crucially on the
preservation of ecological assets and depletion versus replenishment of resources.

7. Change: Markets, economies and stakeholders are always subject to many changes. Economic models are used
to explain and analyse changes.
8. Interdependence: refers to the idea that economic decision-makers interact with and depend on each other – no
one is self-sufficient. For example, 1 firm’s actions can affect other firms and consumers. 1 country’s actions can
also affect other economies.

9. Intervention: typically refers to government intervention – the government may enact policies to achieve
microeconomic and macroeconomic goals and tackle market failures.