The main economic groups
The main economic groups are consumers producers and the government.
Consumers are people, businesses or sometimes even parts of government that buy goods and/or services to make use of them. For people this is the stuff we buy with no intention to sell. For the government and businesses,
this is the goods and services they buy in order to run their business/department e.g. stationery.
Producers make the goods and services that are sold. Producers can be individuals, small firms, large firms or in some instances like health care, the government.
The government's role is to ensure the good running of the economy and it has the power to set laws and regulations to achieve this. They also aim to improve fairness and as such provide certain services like health and
education so that everyone has access to them.
Interdependence is the idea that within the economy the actions of each of these groups impacts the others. The sugar tax that was implemented in the UK was a move by the government to deal with obesity levels and the
effect they have on health provision. In doing so many consumers responded by buying less goods with sugar in them and many producers responded by lowering the amount of sugar in their products. Another example of
interdependence is that when a product is popular with consumers more producers will enter the market.
The basic economic problem
The basic economic problem is that we have scarce resources but unlimited wants.
The key questions arising from the economic problem when it comes to allocating resources are:
what should be produced?
Who should goods be produced for?
and how should they be produced?
Capitalist countries like the UK and USA primarily allow the market to determine what should be produced and who it should be produced for. However, the governments in these countries do provide some goods and services and
have some control over how resources are allocated.
Communist governments like China have more control over their markets in terms of what is produced, for whom and how but China also has elements of free market activity.
Evaluating the costs and benefits of economic choices
Because resources are finite, economic choices have consequences in terms of sustainability. These can be considered in terms of types of sustainability: economic sustainability, social sustainability and environmental sustainability
| Type of sustainability |
Considerations |
| Economic |
Is it the best and most responsible use of scare resources to ensure continued growth? How much does it cost to make this choice? Does it make money now? Is there the potential for it to continue making money in the
future? Will it use up scarce resources or non renewable resources? Could it create jobs? |
| Social |
What impact will it have on the community it affects wellbeing and quality of life? Is the impact of the choice fairly felt? Is there a match between who pays and who benefits? |
| Environmental |
Is the choice sustainable environmentally? What is the impact on non renewable resources? What are the effects in terms of pollution and climate change? |
Exam style questions
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Questions
Name the three main economic groups. (2 marks)
The main economic groups are consumers, producers and the government.
2 marks - all 3 groups correctly named
1 mark - any one group correctly named
Explain what interdependence means giving an example. (2 marks)
Interdependence is the way the actions of the 3 main economic groups impact on each other (1)
Any suitable example e.g. How consumer preferences influence producers
List the four factors of production. (2 marks)
Land, labour, capital, enterprise
2 marks - all 4 factors
1 mark - any 2 factors
Explain the basic economic problem. (2 marks)
The basic economic problem is that we have scrce resources(1) but unlimited wants(1); or
Deciding what should be produced and for who(1) with our limited resources(1)
Explain what opportunity cost means. (2 marks)
Opportunity cost is the next best choice foregone(1) when you make an economic choice(1); or
also accept a clear example for both marks
You should do some research around the topic of HS2 before answering the next question. Here are some links to useful info if you are having trouble: Newsround pros and cons
from 2020 and BBC News Nov 2021. Then there is HS2.org and StopHS2.org
Analyse and evaluate questions are the trickiest questions in the course. Your ability to get to grips with these types of question is essential to obtaning the higher grades. Remember, you are not trying to give all the information
you know. Instead you are trying to build coherent chains of reasoning by linking ideas together. You also need to remember to use the context of the question. Always be as specific as you can.
When trying to build chains of reasoning you will need to use conjoining words and phrases like because, if then, and as a result. If you have no conjoining words and phrases then you are not linking your ideasinto a chain of analysis.
Evaluation goes another step further and requires you to look at the extent of an effect or to weigh possible positive aspects against negative ones.
Evaluate the environmental impact of HS2 for UK citizens. (6 marks)
Sample answer:
HS2 could allow for more train journeys reducing the number of cars and lorries on the road {AO2 - Applied} As a result there would be less pollution produced in future, which is good for the environmennt and people's health and well being. {AO3a - analysed}
The extent to which this will be successful depends upon the number of cars and lorries it ends up taking off the road.{AO3b - evaluated}
HS2 passes through the countryside and has meant the destruction of some natural habitats and people's homes.
This is bad for the environment in these areas. {AO3a - applied} How close you live to the affected areas may affect the extent to which this impacts people. {AO3b - Evaluated}
If you live in an area where the countryside has been damaged then
no reduction in cars and lorries may seem enough to compensate but for others the degree to which it reduces pollution will be the judge of whether it is overall helpful or not. {AO3 - Reasoned argument}
Additional notes:
By mentioning train journeys, the route of the track and using terms like passengers the answer is definitely in context.
You are asked to evaluate the environmental impact so you should be looking to build an argument for and against it's impact.
When it comes to the fina statement you are not saying whether you think it will be positive or negative but rather to explain in what circumstances it may be beneficial or even for whom and when it will not.