CAMBRIDGE INTERNATIONAL AS & A LEVEL ECONOMICS: TEACHER’S RESOURCE

1 Scarcity, choice
and opportunity cost
Teaching plan
Topic Approximate Learning content Resources
number of
learning
hours
1.1 Fundamental 4 hours What is meant by Coursebook
economic problem the phrase ‘the basic Economics in context
of scarcity economic problem’? Activities 1.1– 1.3
Think like an economist
What is meant by the
Exam- style questions multiple
concept of opportunity
choice 1–6
cost? Exam- style questions unit 1 data
response 1 a–d
Workbook
Key skills exercises 1– 11
Practice questions data response
1 a– b, essay 1

BACKGROUND KNOWLEDGE
• No background knowledge is assumed but it would be useful for learners to understand the
difference between goods and services, the difference between needs and wants, and the
meaning of resources. Check that learners understand these terms before beginning activities.

• You could begin with a discussion about what learners think is involved in studying
economics before beginning your course.

• The debate in economics is largely between efficiency (making best use of scarce resources)
and equity (fairness in the allocation of resources). This should be introduced early on as it will
help with discussion work and essay writing.

• In addition, learners should become familiar with the various economic agents - i.e. households
(which consist of consumers and workers), firms (local, national and international) and
government (both domestic and overseas). This will help when analysing economic issues.

• The questions of what to produce, how to produce and for whom to produce will be covered
in more detail in Chapter 4.

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 CAMBRIDGE INTERNATIONAL AS & A LEVEL ECONOMICS: TEACHER’S RESOURCE

LANGUAGE SUPPORT
• Learners should be offered a robust definition of opportunity cost. This is a key issue that underpins
a lot of economic theory. Learners need to remember that the opportunity cost of choosing option
1 is the benefits given up from not choosing option 2, i.e. the next best alternative.

• In economics, there are no certainties, therefore we tend to use words like ‘might’ or ‘could’
rather than ‘will’ when analysing an economic issue (e.g. a benefit to households might be…
however a problem could be; the government could introduce Policy A…the benefit of this might
be… but the problem of this might be…overall the best policy in this case would be…because).

Common misconceptions

Misconception How to elicit How to overcome

Economics is primarily At the end of this topic, Perhaps define money as a
concerned with the allocation of ask learners if they can recall medium of exchange or a store of
scarce resources, although many what the basic economic value. It is neither a resource nor
learners think it is the study problem is. a good/ service and, therefore, it
of money. has no role in the basic economic
problem.
Learners might think that we Ask learners: what people need If learners do state money,
need money to survive. to survive. then explain that we only need
money in order to buy goods and
services.
A common misconception is Ask learners: will printing Ask learners to find out about
that an increase in the quantity money mean that individuals hyperinflation in Germany in 1923
of money can increase will become better off? or Zimbabwe in 2008 to illustrate
standards of living. the impact of printing more
money.
It is often assumed that the Ask learners: what is the Explain that in choosing between
opportunity cost is the money opportunity cost of choosing to two options, we consider the
which could have been used for study economics? What was the benefits of each and in choosing
alternative purposes. next best alternative subject one option we are giving up the
they could have studied? benefits of the other.

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LEARNING PLAN

1.1 Fundamental economic problem of scarcity

Starter idea
Wish list (20 minutes)
Resources: Coursebook Activity 1.1
Description and purpose: Learners should complete Activity 1.1. Before doing this, ask learners to write down
the things they need to survive (e.g. food, shelter and water) and a list of things they would really like to buy
(e.g. sports car, private jet, swimming pool). This activity will enable learners to distinguish between needs and
wants and practically demonstrates that wants are unlimited. Make sure that learners do not just write ‘money’
on their list, since we want money for the goods and services we can buy with it, i.e. money is of no value in
itself.
What to do next: Use the results of this activity to discuss the resources which are needed to produce all
the things on their lists. Ask how long the list would be if we asked everyone on the planet to write down
all the things they would like to have. This will also introduce learners to the concept of resources, which
will be addressed later on.

Main teaching ideas

1 End-of-year party budget (40 minutes)
Learning outcome: Explain that, because of the scarcity of resources, individuals, firms and
governments have to make choices.
Resources: None
Description and purpose: Split learners into groups of three to four. Give each group a virtual budget to
organise an end-of-year party at school. Ask them to list all the things they would need to buy – (e.g.
food, drinks, decorations, entertainment –) and estimate how much it would cost. The aim of this is to
introduce the concept of limited budgets and having to make choices.

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Ask learners to reflect on this activity. How did they decide what to buy? Do they think that they could
keep their spending within budget? What would they have liked to buy but could not? This could also
illustrate the concept of opportunity cost.

Answers:
Learners’ own answers. The learners will offer you different ideas for their parties. You should
challenge them on why they chose to buy particular goods instead of others.

Differentiation ideas:
• Support: You could do the activity yourself and present them with your idea. You can also justify
the choices you have made.
• Challenge: Ask learners what sort of choices a government might have to make with regards to
budgets. This may be an opportunity for some quick research about how much the government spends
in particular areas.
Assessment ideas: It would be unfair to grade learners on the choices they make. Instead you can assess
how well the learners have participated in the activity and whether or not they understand the key concepts
it was meant to illustrate: scarcity and opportunity cost.

2 Opportunity cost (40 minutes)

Learning outcome: Explain the need for individuals, firms and governments to make choices.
Resources: Paper
Description and purpose: Ask learners to consider the costs and benefits of each of the following choices
(or options) for each group. They should discuss which one they think is the better option.
• Individual: going to university or getting a job?
• Organisation: paying teachers more or investing in new computers?
• Government: building a new hospital or building a new airport?
Once the costs and benefits have been identified, you can point out that given limited time and finance
we cannot have everything we want. Consequently, choosing option A means that we are giving up the
benefits of option B. This introduces the concept of opportunity cost.

Answers:
Learners’ own answers. The point of the activity is to highlight the fact that choices need to be made
(which results in an opportunity cost). Also, learners are beginning to think like economists in the sense
that they should be weighing up the costs and benefits of each proposal.

Differentiation ideas:
• Support: You can talk through the first example with them. This may be useful because it will also
give you a good idea about your learners’ aspirations at the end of your course.
• Challenge: You could ask learners to create their own ‘either/or’ statements to share with their class.
Assessment ideas: You can ask learners to write a small (500-word) summary of their plans after school.
They should try to write in the style of an economist, i.e. using phrases such as costs and benefits, as well
as comparing it to the next best alternative (the opportunity cost).

3 Climate change (40 minutes)

Learning outcome: Define the meaning of opportunity cost; explain how opportunity cost results from
the need to make choices.
Resources: Ask learners to find images of climate change or provide some.
Description and purpose: Split the class into two equal groups. Split Group A into smaller groups of
three to four and ask them what could the government of your country do to combat climate
change.

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Split Group B into smaller groups of three to four and ask them what can be done locally to combat climate
change. Give each group ten minutes for this exercise. At the end of the allocated time, ask each group to
explain their solutions. After this, have a discussion of the benefit of each suggestion and what might need
to be given up in order to put the suggestion into practice. The aim of this activity is to introduce learners
to some of the tough choices we face at the moment, as well as demonstrating the skills of application
and analysis.

Answers:
Learners’ own answers.

Differentiation ideas:
• Support: Group learners with different strengths together in order to help in running this activity.
• Challenge: Learners could be encouraged to research the UN’s Sustainable Development goals.
Assessment ideas: Ask learners to give each other feedback on specific points, e.g. how interesting it
was, whether they understood what was said and any questions they have.

Plenary idea
Poster activity (20 minutes)
Resources: Coursebook Activity 1.2
Description and purpose: Ask learners to read Activity 1.2 and plan their poster in groups of two or three.
This could be finished for homework. Learners should use images in order to make the poster more colourful
and engaging. The aim of this plenary is to help learners consider the benefits given up by society if air
transport growth is restricted. It also encourages teamwork.
Assessment ideas: Ask the groups to share their posters with each other. Each group should articulate
one positive comment on each poster as feedback.

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