Introduction to Microeconomics

IGCSE Economics

Introduction-Revision & more!​

Yes there is always more!

Multiple Select

Which of these goods are also needs?

Check all that are true.

• food

• shelter

• toy

• book

Multiple Choice

Scarcity:

• is a problem only in the poorer countries of the world.
• will disappear if the country is rich.
• can be solved by rapid advances in technology.
• is a problem that exists in every economy with limited resources.

What are Goods and Services?

​Goods...

Goods are items that you can physically interact with they are 'tangible'. When consumers buy them they are called consumer goods. When producers buy them they are called capital goods.

What examples of goods can you think of?​

Always a 'good' topic!

What are goods and services?

​Services...

Services are 'intangible' unable to be touched. They are tasks performed for you for example the person serving food behind the counter at McDonalds.

McDonalds...one of the biggest fast food companies in the world...also the most recognised brand in the world

Multiple Choice

Melissa needs apples to make apple pie for a bake sale. She buys apples from a farmers market. She bakes the apple pies and sells them for $3 at the bake sale. What is true about Melissa in this scenario?

• Melissa is a consumer.

• Melissa is both a producer and a consumer.

• Melissa is a producer.

• none of the above

Multiple Select

Which of the following correctly describe a consumer?

Check all that are true.

• chooses between products

• provides services to others

• makes a good or service

• uses goods and services

We fill our wants and needs with our means...but!

How many want do we actually have?

As you get older your wants will change.

What was the difference between your wants and that of your parents? why?

What happens to your wants as technology and opportunities increase?​

Wants tend to be seen as unlimited or infinite

What are our means?

We use our means to get what we want

We tend to suggest that we have limited mean...a fixed amount of resources to get the things that we want and need. We can consider our time, money, skills and family as means that we have.

But in a production sense we see resources (factors of production) as being categorised as: Land, Labour, Capital and Enterprise​

Bonus points if you can give examples as to what goes into each category of FOP

Multiple Choice

Trees, oil, and minerals are all examples of __________.

• capital resources

• natural resources

• human resources

• none of the above

Multiple Select

The factors of production include:

Check all that are true.

• capital resources

• natural resources

• human resources

• factory resources

Multiple Select

Keith owns a store and a warehouse where metal jewelry is made. Keith buys metals to create the jewelry he sells in the store. Which of Keith’s resources are capital resources?

Check all that are true.

• warehouse

• metals

• store

• Keith's workers

​Scarcity!

We have an economic problem that we have unlimited wants but only limited means...this leads to scarcity! There is not enough resources (means) to get all the things that we want and need...so we must make a choice between different wants.

Subject | Subject

Scarcity is a major theme in all of Economics

Multiple Choice

Scarcity is a problem:

• that only poor people face.
• because human wants are limited while resources are unlimited.
• because human wants are unlimited while resources are limited.
• only in third world countries.

Multiple Choice

The three basic categories of resources are land, labour and:

• money.
• time.
• energy.
• capital.

The Economic Problem...

​How can we solve this idea of Scarcity?

​We have to make decisions as to what to produce, how to produce it and for who to produce it (who gets it)

Otherwise known as the production, allocation and distribution problems

How to solve the Economic Problem?

​Not really solving it...just making decisions

Depending on our philosophy we will either decide to give control of our resources 100% over to the Govt and let them decide (Planned economy). Or give complete control over to the market and let supply and demand decide (more on these ideas later). Or we could mix and match and have some govt and some market (Mixed economy).

most modern economies are mixed economies

Over time what happens...

​As time moves on typically our economies change

We tend to move from a more traditional agricultural based economy to a more capital based production economy and then to a more service based economy. One famous Economist 'Evil Santa' suggested that we would continue to evolve our economies until we reached utopia!

Bonus points if you know who Evil Santa is!

Multiple Choice

Many years ago, the __________ sector was the primary economic sector in the United States. As technology improved, the __________ sector grew becoming the most important economic sector. This resulted in people moving to cities and the primary economic sector changed as well. Now the largest economic sector is the __________ sector.

• entertainment; service, mining

• mining; entertainment; agricultural

• service; manufacturing, agricultural

• agricultural; manufacturing; service

Economics tends to be split in two

​Each half representing a different study of the Economy

In the study of the small/individual decisions of businesses, markets, consumers we study Microeconomics.

In the study of the big picture concepts surrounding the entire economy we study Macroeconomics.​

Micro meaning small and Macro meaning big

Multiple Choice

Which of the following is the best example of a microeconomics topic?

• The impact that the money supply has on inflation.
• The effect that government budget deficits have on the interest rate.
• The reasons for increases in the price of mobile phones.
• The trade-off between inflation and unemployment.

Multiple Choice

Policies to lower the price index of goods in the nation are a concern of:

• macroeconomics.
• microeconomics.
• both microeconomics and macroeconomics.
• political science.

Multiple Choice

Which of the following would be of particular interest to a microeconomist?

• The price of an apple.
• The nation’s inflation rate.
• The nation’s rate of unemployment.
• The budget of the national government.