IBDP Economics Chapter 1 Notes

the foundation of economics


These notes have specially been curated by expert teachers to simplify and enlighten concepts given in IB The Foundation of Economics HL. The notes are comprehensive in nature and are sufficient to study the chapter in depth and one need not look for other resources beyond the notes provided on our website which can be accessed for free. The notes for The Foundation of Economics IBDP HL are available on our official website and can be downloaded for free. The material made available on Tychr’s website is available for all IBDP subjects and is specially curated after an extensive amount of effort to ensure that the notes are in consonance with the IB curriculum and are an amalgamation from various textbooks prescribed by the IBO.

In this chapter of The Foundation of Economics we understand the basic problem of the economy which is scarcity. There are unlimited human wants and scarce economic resources which leads to choices and eventually leads to the concept of opportunity cost. In this chapter we also study the production possibility curve which shows various combinations of two commodities that can be produced by an economy with given resources and given technology. The PPC helps solve the basic economic problems with the help of the ‘invisible hand’ as identified by Adam Smith. Next we see how economics is a social science and that it is an ongoing process because it is a method of Investigation which is used in all the social and natural Sciences.

Economics is also a model builder in which a theoretical construct representing economic processes by a set of variables and a set of logical and quantitative relationships between them is represented. Economics as a positive and normative concept is also taught in this chapter. The difference between microeconomics and macroeconomics is also something which is paid attention to to help the students understand this chapter better.

Lastly, we also look at the central themes of an economy which are (a) economic growth economic and development (b) current patterns of resource allocation which is a threat to sustainability (c) the intervention of the government in the allocation of resources and lastly (d) the conflict between the goals of economic efficiency and equity. These Central themes help the students understand the basic problem of economics in a much detailed manner.