IGCSE Economics

Unit 1 – Choices and Opportunity

Costs
 Re-cap Questions:
1. What is the Basic Economic Problem?
2. What is the name for a resource which is
unlimited?
3. What is the name for a resource that is
relatively scarce?
4. What are the four factors of production?
 Learning Outcomes
• Define opportunity cost and analyse
particular circumstances to illustrate the
concept
• Evaluate the implications of a particular
course of action in terms of opportunity cost.
Starter – Sweet Choices
 Opportunity Costs
• Any time we have to make a choice……. The
alternatives we don’t chose are seen as a
cost
• Opportunity Cost refers to the next best
alternative foregone when a decision is
made
Why might we have to make a
choice?
 Choice
People, businesses and governments only have a
limited amount of money but have many needs and
wants to satisfy

$100bn
$100

Food? Entertainment? Defence? Health care?

Clothing? Roads?

What might a small business spend $20,000 on?

 Your opportunity costs…
• Write a list of 5 decisions that you have
made recently
• For each state the opportunity cost of this
decision.
• (Remember….. Your limited resource could
be time, money, materials etc)
What other alternatives are there for
this land?
 What alternatives could the
following resources be used to
produce?
 What could the opportunity cost be
of…….
• Eating pizza for dinner
• Buying an IPad
• Going to university
• Choosing to become a teacher
• Going on holiday to Vietnam
• Spending the evening watching TV
• Choosing to study Economics at iGCSE
• The government building a new school
 Lets get Graphical…..
• Imagine you have 5
hours of your
evening.
5
• You have to choose
how long to spend 4

playing on Xbox and

Hours Homework
3
how much to spend 2
on your homework.
How can we graph 1

this? 0
0 1 2 3 4 5
Hours Xbox
 Conflicts of Interest
• Sometimes when decisions are made the
needs/wants of certain groups are satisfied
where as others are not.
• This is known as a ‘conflict of Interest’
• These groups are sometimes referred to as
‘Stakeholders’
Do NOT confused this with “stockholders”.
 Example…..
• Which stakeholder groups will be happy and
which will be unhappy if the government
decides to build a new motorway?