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GCSE Economics 03 — Government & Economy

GCSE Economics 03 — Government & Economy

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Topics include Scarcity, Choice and Opportunity Cost, Production Possibility Curves and Growth, Economic Assumptions and Behaviour, Demand Basics and Effective Demand, Non‑price Determinants and Types of Goods, Specialisation, Division of Labour and Sectors, Money, Markets and Real‑world Applications, and Extra Practice and Edge Cases.

Economics EN
250 cards
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Scarcity, Choice and Opportunity Cost

Exam-focused explanation of scarcity, choice and opportunity cost, with definitions, diagrams and common misconceptions.

Key points

  • Resources are finite but wants are unlimited, so scarcity forces choices.
  • Opportunity cost is the value of the next best alternative forgone.
  • Factors of production: land, labour, capital, enterprise.
  • All economies face: what to produce, how to produce, for whom to produce.

Worked example

Question

A council can fund either a new sports centre or road repairs, but not both. Identify the opportunity cost.

Solution

The opportunity cost is the benefits forgone from the next best option not chosen (e.g., the sports centre if road repairs are chosen).

Common pitfalls

  • Confusing a movement along a curve with a shift of the curve.
  • Using an incorrect diagram (wrong labels, axes, or direction of shift).
  • Defining opportunity cost as 'the price paid' rather than the next best alternative forgone.
  • Listing factors of production but mixing up capital with money.

Prerequisites

  • Basic economic problem (scarcity, choice, opportunity cost)
  • How to read simple graphs and interpret changes (movement vs shift)
Further resources