Syllabus: Pearson - A Level Economics
Module: 1.1 Nature of Economics
Lesson: 1.1.3 The Economic Problem

Introduction

This article aligns with the Pearson Edexcel A Level Economics specification for Theme 1.1.3, “The economic problem” Stuvia+2Tutor2u+2Pearson Qualifications+2Pearson Qualifications+11Enterprise Skills Ltd+11Stuvia+11Pearson Qualifications+10Pearson Qualifications+10Pearson Qualifications+10Tutor2u. It unpacks the foundational issue of scarcity, choice and resource allocation to support teachers, school leaders, careers leads and SLT. Understanding this topic equips learners to think like economists and prepares them for deeper study across microeconomics and macroeconomics.

Key Concepts

• Scarcity: The tension between unlimited human wants and finite resources – land, labor, capital, and enterprise Pearson Qualifications+3Pearson Qualifications+3Pearson Qualifications+3.

• Opportunity cost: The value of the next-best alternative foregone when choosing one option over another Pearson Qualifications+10Physics and Maths Tutor+10Tutor2u+10.

• Economic goods vs free goods: Recognising what must be allocated and what is available in abundance Seneca Learning+1Pearson Qualifications+1.

• Resource types: Differentiation between renewable and non-renewable resources and their implications Tutor2u.

• Trade‑offs for economic agents: How consumers, producers and government face different opportunity costs and make choices under scarcity Pearson Qualifications+2Enterprise Skills Ltd+2Pearson Qualifications+2.

Real-World Relevance

• Government budgets and green infrastructure: How public spending on climate policy may reduce available funds for healthcare or education illustrates trade-offs and opportunity cost.

• NHS prioritisation: NHS trusts routinely assess which treatments to fund, exemplifying scarcity in public services.

• Household budgets: Families making decisions on rent, food or utility bills provide clear, everyday examples of opportunity cost.

• Environmental concerns: Decisions between exploiting non-renewable resources and preserving renewable ones spotlight sustainable allocation.

How It’s Assessed

In the Pearson Edexcel A Level, Theme 1 content including 1.1.3 is tested in Paper 1 (Markets and business behaviour) Enterprise Skills Ltd+1Financial Times+1Pearson Qualifications+14Pearson Qualifications+14Enterprise Skills Ltd+14.
Expect formats such as:

• Section A: multiple‑choice and short‑answer questions testing recall of definitions like scarcity, opportunity cost.

• Section B: data‑response questions requiring analysis of real‑world trade‑off scenarios.

• Section C: extended writing (e.g. “Evaluate…”), demanding structured arguments and economic analysis.
  Common command words include “explain,” “analyse,” “evaluate,” and “discuss” in the context of scarcity, opportunity cost and resource allocation.

Enterprise Skills Integration

• Problem-solving: Analysing real situational trade‑offs strengthens logical thinking.

• Decision-making: Assessing opportunity costs reflects informed judgement under constraints.

• Critical thinking: Evaluating policy decisions encourages scrutiny of competing socio‑economic objectives.

• Quantitative literacy: Utilising production possibility frontiers (PPFs) and numerical illustrations builds data skills Pearson Qualifications+3Pearson Qualifications+3Enterprise Skills Ltd+3Tutor2u+2Enterprise Skills Ltd+2Pearson Qualifications+2Tutor2u+2Pearson Qualifications+2Pearson Qualifications+2.

Careers Links

This topic underpins various career pathways aligned with Gatsby Benchmarks:

• Public policy and civil service – allocating limited public budgets and assessing policy trade-offs.

• Consultancy/Finance – using resource optimization frameworks and cost-benefit analysis in firms.

• Environmental management – managing renewable vs non-renewable resource allocation in sustainability roles.

• Education and research – developing economic modelling and pedagogy around scarcity and allocation.

Teaching Notes

• Use PPF diagrams: Introduce with simple examples (e.g., guns vs butter) to visually demonstrate scarcity, efficiency and opportunity cost.

• Case study: Present a brief scenario—such as a local council deciding between funding a new library or school upgrade—and ask students to identify trade‑offs and opportunity costs.

• Common pitfalls:

  • Confusing scarcity with choice: emphasise scarcity exists even if no choice is made.

  • Overlooking opportunity cost: stress it applies even in “no cost” decisions.

• Extension activities:

  • Use Pearson’s ExamWizard to select past questions on scarcity and cost–benefit. Seneca Learning+15Pearson Qualifications+15Pearson Qualifications+15Pearson QualificationsEnterprise Skills Ltd+1Tutor2u+1Physics and Maths Tutor

  • Encourage research-based tasks where students gather real data on resource allocation (e.g., local environmental initiatives).

• Assessment insight: Markers look for clear definitions, relevant diagrams, real-world examples and depth in analysis (i.e., acknowledging both benefits and limitations).