An Overview of ‘A’ Level H2 Economics Part 1: The Central Economic Problem
Economics is the study of how individuals, firms, and societies manage their scarce resources. It explores how we set prices, make decisions and allocate goods and services. This subject has been taught at ‘A’ Level for nearly three decades. It is a compulsory module in many degree courses. Alongside other modules such as mathematics, biology, and physics, economics provides an essential grounding for students studying any social sciences or humanities subjects.
The ‘A’ Levels course has undergone many changes over recent years, introducing new topics to reflect current economic conditions, and JC students now have the choice of choosing either the H1 or H2 economics syllabus.
The H2 Economics Papers
The H2 economics paper and syllabus is, of course, more intensive than the H1 format. Unlike H1 Economics, for H2 Economics, students have to solve two papers: P1 and P2.
Paper 1 consists of two case study questions. Each question consists of 2-3 pages of data shown in graphical, numerical, or textual form. Each will present current economic issues or policies from one or more themes in the syllabus. In addition, six or seven part-questions follow each case study. These questions require candidates to apply relevant economic concepts, theories, and principles in analysing and evaluating economic issues, policies, or perspectives, concerning the case study.
Twelve marks of each set of case study questions are allocated for data response questions, and 18 marks are allocated for higher-order questions.
Paper 2 consists of essay questions. P2 has two sections: Section A and Section B. Questions in Section A are based on microeconomics, and Section B questions are based on macroeconomics.
Essay questions can be divided into parts (a) and (b). Questions may have practical contexts from the real world. Students are expected to use relevant economic concepts, principles, and theories to examine perspectives or policies. Students should be able to construct strong arguments to reach well-reasoned solutions.
The overall syllabus content comprises three primary themes:
- The Central Economic Problem
- The National and International Economy
In this article, we’ll discuss the first theme of the H2 economics syllabus: The Central Economic Problem.
Theme 1: The Central Economic Problem
The first theme builds the basis for the entire syllabus and introduces students to the Central Economic Problem of limited resources and unlimited wants. It allows students to adequately comprehend the Central Economic Problem facing societies by studying how consumers, producers, and governments face the concepts of opportunity, choice, and scarcity cost.
The first theme will also focus on the intended and unintended results of decisions made by economic agents.
These aspects provide the foundation for microeconomic and macroeconomic topics in Themes 2 and 3 respectively, where the decision-making strategy and concepts of scarcity, choice, and opportunity cost are revisited.
Now, let’s take a look at the specific topics tackled in Theme 1.
And, a word to the wise: Don’t get intimidated by the new terms you see in this section. When you go through the syllabus with a tutor or a teacher, they will make sure to explain every topic as they come.
Theme 1.1 Scarcity as the Central Economic Problem
1.1.1 Scarcity, choice and resource allocation
Here, you are expected to understand the concept of scarcity and the inevitability of choices by economic agents, along with the idea of opportunity cost and the nature of trade-offs in the allocation of resources
1.1.2 Rational decision-making process by economic agents
This section tackles the aims of the main economic agents:
This section will also tackle your understanding of different constraints and economic perspectives. Additionally, you should also judge the costs and benefits of the decision-making process. Finally, you should have the skills to correctly realise the trade-offs along with the intended and unintended consequences of any economic decision.
Concepts and Tools of Analysis
- Positive and normative economics: Positive economics focuses on the “what” of an economic situation, while normative economics focuses on the “value” of a financial problem.
- Microeconomics and macroeconomics: Microeconomics concerns economics at the individual or company level, while macroeconomics focuses on the national economy.
- Scarcity, choice, and opportunity cost: Scarcity means lacking goods or services. Opportunity cost refers to the gain or loss of price incurred by economic activity.
- Production possibility curve (PPC): A graph highlighting all of the output varieties produced with the available technology.
- Marginal cost, marginal benefit, and marginalist principle: A theory which claims that individuals decide on the purchase of a good or service based on the utility they will receive from it.
- Maximisation of utility: Refers to the concept that economic agents try to get maximum satisfaction from their financial decisions
- Maximisation of profit: Marginal Revenue = Marginal Cost
- Maximisation of social welfare: Marginal Social Benefit = Marginal Social Cost
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