Master the foundations of economic thinking
What Is Economics? The Science of Choice
Every economic story begins with scarcity. In this foundational topic, you'll learn to think like an economist—using models, marginal thinking, and opportunity cost to decode the choices that shape markets, governments, and daily life.
- IB ECONOMICS • TOPIC 1.1
This topic
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Overview
1.1 What is Economics?
This opening topic introduces the core vocabulary and mental models of economics. Students examine the basic economic problem—unlimited wants versus limited resources—and learn how opportunity cost, production possibility curves, and marginal analysis frame every decision from household budgets to government policy.
Assessment focuses on defining key terms precisely, drawing and interpreting PPC diagrams, and applying the concepts of scarcity and choice to real-world contexts in Paper 1 essays and Paper 2 data-response questions.
Key ideas
What 1.1 What is Economics? covers
- 01
The Economic Problem
Unlimited wants meet finite resources—why scarcity forces every society to answer what, how, and for whom to produce.
- 02
Opportunity Cost & Trade-offs
The true cost of any choice is the next best alternative forgone; master calculating and illustrating it numerically and graphically.
- 03
Production Possibility Curves
Model an economy's maximum output combinations, showing efficiency, inefficiency, unattainable points, and economic growth.
- 04
Marginal Analysis
Decisions are made at the margin: comparing marginal benefit and marginal cost to optimise outcomes.
- 05
Positive vs Normative Economics
Distinguish testable, fact-based statements from value judgements—a skill examiners reward in every paper.
Outcomes
Learning outcomes
- Define and apply core conceptsConfidently use scarcity, choice, opportunity cost, PPC, marginal analysis, and positive/normative distinction in written responses.
- Construct and interpret PPC diagramsDraw accurate curves, label axes, show shifts from growth or resource loss, and explain points inside, on, and outside the frontier.
- Evaluate real-world trade-offsApply opportunity-cost reasoning to government budgets, firm production decisions, and personal time allocation.
- Identify economic reasoning in newsSpot positive and normative claims in media, policy papers, and exam extracts—then critique their validity.
- Structure Paper 1 definitions preciselyDeliver concise, examiner-ready definitions that earn full marks on the 'define' and 'explain' command terms.
Exam tips
How this is examined
Examiner's view
- Label every PPC axisAlways label axes with specific goods (e.g., 'Capital Goods' vs 'Consumer Goods')—generic labels lose easy marks.
- Use 'marginal' languagePhrases like 'marginal benefit exceeds marginal cost' signal higher-order thinking in 10- and 15-mark essays.
- Quantify opportunity costWhen data allows, calculate numerical opportunity cost (e.g., '10 units of wheat per tank') instead of vague descriptions.
- Flag normative statementsCircle words like 'should', 'ought', 'fair', 'better' in extracts—they signal normative claims for evaluation questions.
Notes
Study notes
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Ready to master 1.1 What is Economics??
Every economic story begins with scarcity. In this foundational topic, you'll learn to think like an economist—using models, marginal thinking, and opportunity cost to decode the choices that shape markets, governments, and daily life.