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Basic economic problem: choice and the allocation of resources

Candidates should be able to:

  • define the nature of the economic problem (finite resources and unlimited wants)
  • define the factors of production (land, labour, capital, enterprise)
  • define opportunity cost and analyse particular circumstances to illustrate the concept
  • demonstrate how production possibility curves can be used to illustrate choice and resource allocation
  • evaluate the implications of particular courses of action in terms of opportunity cost.