So I'm going to talk a little bit about the nine central concepts. You should have been introduced to those nine central concepts in your assigned reading in the previous lesson. So let's introduce basically and talk a little bit about the nine central concepts in the IB Economic Syllabus and how do they relate to each other in the study of economics.
So the first central concept, and essentially it's the central problem of economics as a science in general, is the problem of scarcity. Remember, scarcity is a very relative concept. When you compare the seemingly unlimited needs and wants of humanity to the limited resources that are available to satisfy those needs and wants, it appears that resources are scarce.
It's a relative concept. Now, because of this problem of scarcity, economic actors or economic agents have to make choices. So the second central concept is that of choice.
Now, the choices that economic actors make, first of all, have consequences. Some of these consequences are positive, some are negative. Some are long-term, some are short-term consequences. Some are intended consequences, some are unintended consequences. Economists try to study the consequences.
of the choices made by economic actors as a result of scarcity. The second thing we need to remember about these choices are that they involve trade-offs. There's often an opportunity cost.
Every time you make a choice, you're giving something up. There is a trade-off. Economists are also interested in studying those trade-offs and the choices that economic actors make.
actors make are often influenced by the incentives that they face. The assumption that economists make is that economic actors, when making their choices due to the problem of scarcity, they're often driven by their economic well-being. So consumers, producers, the government, workers will often act and make their choices, their economic choices, driven by pursuing their economic well-being. These are the incentives that they often face.
So now I've just introduced the first concept, which is scarcity, the second, which is choice, and the third, which is economic well-being. And we've seen how all three of them are linked together. So remember I mentioned in the previous slide, I mentioned economic actors. When we say economic actors, we're talking about consumers, producers that interact in markets.
We're talking about the government. We're talking about workers. We're talking about foreign nations.
nations interact with each other within the economic sphere. Now, economic actors often interact within economic systems, right? Whether these systems are markets or whole economies, these economic systems are subject to constant change this is a very important central concept in economics economic systems are very dynamic and they are subject to constant change economists are also interested in studying change within economic systems the causes of that change the processes involved in the consequences of that change As I mentioned in the previous slide, economic actors operate within economic systems. These economic systems, other than being very dynamic, they are also characterized by interdependence, meaning all economic actors are interdependent.
because they interact with each other within those economic systems. The choices made by one economic actor will usually have lots of consequences, either intended or unintended, on other economic actors. Economists study the interdependence between different economic actors operating within economic systems as well.
Now let's take a step back. So we said that because of scarcity, economic actors have to make choices. And these choices have consequences and involve trade-offs. Some of these trade-offs are the sort of trade-off between efficiency and equity, two of the nine central concepts. Sometimes more efficient outcomes can be less equitable or less fair to others.
What's good for some may be bad for others. Again, remember, economic actors are very interdependent. Also, another trade-off that economists study is the trade-off between economic well-being when individuals and nations and societies pursue their economic well-being.
This often poses challenges to sustainability, which is the ability to meet the needs of the current generation without compromising the ability of future generations to meet their needs. Now, because of these consequences that are often unintended and can be negative and these trade-offs, governments often interfere. So intervention is another one of the nine central economic concepts. Economists study government intervention.
whether or not governments should interfere, how much should governments intervene in markets. All of this is subject to debate between economists. So to summarize or sort of wrap up, your IB economic syllabus is concerned with nine central basic concepts of the study of economics.
You should be able to define each of these. You'll find the definitions in your readings. You should be able to talk about how they link and you should be able to link them to all other sort of themes that we will be and units we will be studying in IB economics. The first one is scarcity, the second one is choice, the third one is change, the fourth one is economic well-being, the fifth one is efficiency, sixth one is equity, seventh interdependence, eight sustainability, and nine intervention.
You should be able to seek out these concepts within the topics that you're studying and within the real-life examples that you are analyzing and try to tease them out and draw links between the nine central concepts.