What you'll learn
Why scarcity forces economies to make choices.
Key ideas
- Scarcity: limited resources, unlimited wants; opportunity cost.
- The factors of production: land, labour, capital and enterprise.
- The three questions: what, how and for whom to produce; the production possibility frontier (PPF).
Exam tips
- Give a clear opportunity-cost example.
- Explain what the PPF shows.
Common mistakes
- Confusing the factors of production.
- Forgetting opportunity cost is the next best alternative.