IB Econ: 9 Key Concepts

Scarcity

The central concept in economics, refers to the limited availability of economic resources relative to society's unlimited demand for goods and services.

Choice

Since resources are scarce, economics is a study of this. It is clear that not all needs and wants can be satisfied; this necessitates decisions and gives rise to the
idea of opportunity cost.

Efficiency

This is a quantifiable concept, determined by the ratio of useful output to total input.

Equity

This refers to the concept or idea of fairness. Fairness is a normative concept, as it means different things to different people.

Economic well-being

This is a multidimensional concept relating to the level of prosperity and quality of living standards enjoyed by members of an economy.
It includes:
• present and future financial security
• the ability to meet basic needs
• the ability to make economic choices permitting achievement of personal satisfaction
• the ability to maintain adequate income levels over the long term.

Sustainability

Meeting the needs of the present generation without compromising the ability of future generations to meet their own needs.

Change

An understanding of the concept of change is essential in economics. The economic world is in a continual state of flux and economists must be aware of this and adapt their thinking accordingly.

Interdependence

Individuals, communities and nations are not self-sufficient. Consumers, companies, households, workers, and governments, all economic actors, interact with each other within and, increasingly, across nations in order to achieve economic goals.

Intervention

This in economics usually refers to government involvement in the workings of markets.