RI H1 Economics Lecture Notes 2024 Central Problems of Economics

CENTRAL PROBLEM OF ECONOMICS CONTENTS: 1. What is Economics? 2. Scarcity, Choice and Opportunity Costs 3. The Decision-Making Framework 4. The Production Possibility Curve (PPC) Model This series of lectures provides an introduction to economics and the central problem of economics: scarcity. Faced with limited resources and unlimited wants, economic agents have to make choices. However, this results in trade-offs and opportunity costs. RAFFLES INSTITUTION YEAR 5 ECONOMICS 2024 LECTURE NOTES ECONOMICS

Raffles Institution Economics Department RAFFLES INSTITUTION YEAR 5 ECONOMICS 2024 CONTENTS 1 WHAT IS ECONOMICS? ........................................................................... 4 1.1 INTRODUCTION TO ECONOMICS ................................................... 4 1.2 MICROECONOMICS VS. MACROECONOMICS .............................. 4 2 SCARCITY, CHOICE AND OPPORTUNITY COST.................................. 5 2.1 SCARCITY .......................................................................................... 5 2.2 RESOURCES ...................................................................................... 6 2.3 INEVITABILITY OF CHOICES – MAKING RATIONAL CHOICES .... 6 3 THE DECISION-MAKING FRAMEWORK ................................................ 8 3.1 RATIONAL DECISION-MAKING BY ECONOMIC AGENTS ............ 9 3.2 RATIONAL DECISION-MAKING ON AN ECONOMY-WIDE PERSPECTIVE ............................................................................................ 12 4 THE PRODUCTION POSSIBILITY CURVE (PPC) MODEL ................. 14 4.1 SCARCITY ....................................................................................... 14 4.2 CHOICE............................................................................................ 15 4.3 OPPORTUNITY COST .................................................................... 15 4.4 EFFICIENCY .................................................................................... 15 4.5 MOVEMENT FROM A POINT WITHIN TO A POINT ON THE PPC 16 4.6 FACTORS CAUSING SHIFTS OF THE PPC.................................. 16 5 CONCLUSION......................................................................................... 17 APPENDIX 1: THE ECONOMIC DECISION-MAKING PROCESS ............... 18 CENTRAL PROBLEM OF ECONOMICS

Raffles Institution Economics Department References 1 Sloman, J., Economics, 8th Edition, Hertfordshire: Prentice Hall* 2 Beardshaw, J., Economics: A Student’s Guide, 5th Edition, Pearson Education* 3 Mankiw, Quah& Wilson, Principles of Economics: An Asian Edition: Cengage Learning* Lipsey & Courant, Economics, 11th Edition, Harper Collins 4 Colin Bamford & Susan Grant, Cambridge International AS & A Level Economics, 2nd Edition, Cambridge 5 Joycelyn Blink and Ian Dorton, IB Diploma Program, Economics (Course Companion), Oxford Lecture Objectives / Checkli