If you’ve chosen to study Economics for your Preliminary and HSC years, or you are simply trying to make up your mind, you have come to the right place. Here we will go through what the Year 11 and 12 economics course is all about!
Scarcity and the Economic Problem
In this preliminary and HSC Course you will also learn that, as an economist, one should understand that resources in the world are finite. In other words, the society has insufficient productive resources to fulfil all consumer needs and wants. Thus, leading us towards the ‘Economic Problem’ which explains that although the needs and wants of consumers are endless, the resources that allow for us to fulfil our needs and wants are limited. Therefore, the underlying feature of economics is concerned with choices regarding how to allocate resources in society to make the most efficient and fair use of resources.
What is Economics
First of all, economics is ultimately the study of people and choices. Economics is NOT focused on the study of money, the stock market or getting rich, although economics fundamentals may help you understand how these systems work. Understanding economics can change the way you think, the way you problem solve, and help you understand the world around you. Examples include, understanding how interest rates can affect the use of money within the economy, or how employment levels can be influenced by changing the inflation rates. You will learn to understand all of these connections throughout this course!
Needs, Demand and Supply
‘Needs’ refer to the basic necessities of life such as housing, fresh drinkable water, edible food and health care. However , ‘demand’ is an economic principle that describes a consumer’s desire and willingness to pay a price for a specific good or service. Thus, ‘supply’ describes the total amount of a specific good or service that is available to consumers. These three economic terms are the fundamentals of economics and are used throughout the preliminary and HSC course. Here is an introduction of what a demand and supply graph looks like, dont worry if you don’t understand, we will go into detail later!
Economics is thus concerned with:
What to produce?
How to produce it?
Who are we producing this for?
Opportunity costs can be referred to as an alternative cost or a trade-off. For example, you have $20,000 to either choose to spend it on a new car or a family holiday. If you choose the car, then ultimately you will have no holiday. Economists would describe this situation as ‘the opportunity cost of choosing a car is the family trip’. You chose the car over the trip, so the cost of having the car costed you everything from the experiences, cost of the holiday, sightseeing and new opportunities that you could have had with your family. Opportunity costs are made by individuals, businesses, governments at local, state and national levels.
Individuals: May choose to spend their weekends with family or they can spend it with friends.
Businesses: May choose to produce shoes rather than something else such as socks
Governments: May choose to increase expenditure on hospitals rather than on military weapons.
The economic problem and its impact varies according individual income levels. The ability for a poor individual to satisfy his or her wants and needs will be a lot harder than for someone who has a sufficient level of income and has excess (Savings) after spending for his or her necessities in daily life. Thus, the economic problem affects people with lower incomes more because they have significantly less resources (Income) to satisfy their wants.
After reading through these fundamental economic concepts, I hope you have gained a new understanding and insight to this fun and interesting subject! Economics is a fantastic subject, but it is heavily content based and I would discourage students to not join if they are not willing to invest the time to study and understand this subject.
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