Document page
Economics IGCSEPDF 5
118 pagesrevision 46932
PDF 5
Page image rendered from the stored file at 110 dpi; it sharpens as you zoom. Outlines are placed from each region’s stored position on the page (612 × 792 pt).
readable
Source of this text: embedded text layer. The better of the embedded text and OCR is kept.
Chapter 1: The basic economic problem
Explain the economic problem and why it is always likely to exist. [4]
The fundamental problem that faces all economies (individuals, firms, and governments) is
Scarcity.
• Scarcity is caused by the conflict between:
1. Unlimited Wants: The desire for goods and services is endless and constantly increasing.
As one want is satisfied, new wants emerge.
2. Finite (Limited) Resources: The inputs required for the production of goods and services
are limited in supply at any given time.
Free goods are those which exist outside of the basic economic problem because they are not
scarce,they do not use factors of productions.e.g sunlight.
Economic goods are the products and services that form the basis of the entire economy.
Their existence is defined by the basic economic problem: scarcity.
PAST-PAPER QUESTIONS
Q:
Free goods vs. Economic goods