1.1 What is the nature of economics?

What students need to learn:

Content	Students should be able to:	Additional Guidance Notes
Scarcity	Understand the problem of unlimited wants and finite resources. Distinguish between renewable and non-renewable resources.	Students should understand that the economic problem is faced by consumers, producers and the government. Students should understand the meaning of sustainable resources.
Production possibility frontiers	Use production possibility frontiers to depict opportunity cost, economic growth and the efficient allocation of resources. Distinguish between movements along and shifts in production possibility frontiers.	Marginal analysis is required to depict opportunity cost. A basic definition of economic growth is required along with knowledge of the factors which might cause the production possibility frontier to shift outwards or inwards.
Specialisation and the division of labour	Understand the advantages and disadvantages of specialization and the division of labour.	AS students are not expected to have an understanding of international specialisation and comparative advantage.
Free market and mixed economies	Understand the advantages and disadvantages of a free market economy and why there are mixed economies.	Students are not expected to have an understanding of centrally planned economies.
Positive and normative economics	Distinguish between objective statements and value judgements on economic issues.	Students should know that value judgements influence economic decision making and policy.