The subject “economics” includes a range of concepts and a specialised language that can be used to simplify and analyse complex problems. This is a form of modelling reality in order to better understand it and make decisions. Any model, by simplifying reality always leaves out some aspects, and we must always be careful to consider the potential dangers in doing this. Despite these dangers, during the last 300 years Economics has been a greatly valued subject that has helped decision makers improve their decisions and has helped us have a greater understanding the world we live in.
- This is the Cambridge 9708 syllabus applicable for exams from 2023 to 2025.
- Here are past exam papers and mark schemes for the years 2001 to 2022.
Throughout the course there are underlying key concepts which we will see appear repeatedly. I have listed these below and it is good to return to them from time to time to think about how they related to the topics we are studying:
- Scarcity and choice: the fundamental problem in economics is that resources are scarce and wants are unlimited, so there is always a choice required between competing uses for the resources and an opportunity cost in making this choice.
- The margin and decision-making: in economic theory, decision-making by consumers, firms and governments is based on choices at the margin – for example firms will produce up to the point where the revenue generated by an extra unit of output is equal to the cost of producing it. However, economic decision-making can be based on facts, theory, effectiveness, priorities/objectives and values/ethical judgements.
- Equilibrium and disequilibrium: Individual markets and the economy as a whole are always moving into and out of equilibrium, constantly altering the allocation of resources.
- Time: economic conditions change in different time periods, such as the short run and the long run. Individuals, firms, markets and governments are able to respond to these changes in different ways depending on the time frame. Some economic decisions have a time frame element – trading off a cost in the present for a benefit in the future, for example.
- Efficiency and inefficiency: individual markets and the economy as a whole can be both efficient and inefficient in different ways when using scarce resources.
- The role of government and the issues of equality and equity: there is a trade-off between, on one side, freedom for firms and individuals in unregulated markets and, on the other side, greater social equality and equity through government regulation of individuals and markets.
- Progress and development: Economics studies how societies can progress in measurable money terms and develop in a wider, more normative, sense regarding living standards, inclusivity and sustainability.