Syllabus: Pearson - GCSE Economics
Module: 1.1 The Market System
Lesson: Pearson - 1.1.2 Economic Assumptions
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Introduction
This lesson covers Section 1.1.2 of the Pearson Edexcel International GCSE Economics specification, focusing on economic assumptions within the market system. It’s part of the foundational microeconomic framework that helps students understand how individuals and firms make decisions.
Teaching this topic builds students’ ability to critically assess real-world behaviour and develop core analytical skills. It also lays groundwork for later topics like market failure and business objectives. For teachers, this is a plug-and-play topic that connects directly to everyday behaviours students can recognise and discuss.
Key Concepts
The specification outlines three key areas for students to learn:
Assumptions of rational behaviour
Consumers aim to maximise their benefit.
Producers aim to maximise their profit.
Why consumers might not maximise utility
Struggles with complex calculations of benefit.
Habitual behaviours that override logic.
The influence of social norms and trends.
Why producers might not maximise profit
Managers may prioritise sales or revenue instead.
Some firms focus on customer care or ethical goals.
Charitable organisations may not prioritise profit at all.
These points encourage students to think beyond textbook models and question the limitations of economic theory.
Real-World Relevance
Economic assumptions play out daily. A few relatable examples:
Consumers: A teenager might spend £5 on a coffee from a trendy café, despite knowing a homemade one costs 20p. It’s not about financial logic — it’s about convenience, habit, or social influence.
Producers: Consider Ben & Jerry’s. While they aim to make a profit, their mission includes social justice and sustainability, which sometimes influences decisions more than short-term gains.
Discussing brands like Lush, Patagonia, or Greggs gives students real hooks to explore non-profit-maximising behaviour.
How It’s Assessed
Students can expect to encounter this topic in the 1 hour 30 minute Pearson GCSE Economics exam. The exam paper includes four compulsory questions, each worth 20 marks, mixing:
Multiple-choice
Short answer
Data response
Extended response
Relevant command words include:
Explain (state and justify a point)
Analyse (break down and connect ideas)
Evaluate (weigh up and conclude)
A typical extended response question might ask:
“Evaluate the assumption that consumers always act to maximise their benefit.”
Students should bring in examples, challenge assumptions, and reach a supported judgement.
Enterprise Skills Integration
This topic is ideal for developing:
Critical thinking: Challenging economic models encourages questioning and curiosity.
Decision-making: Analysing trade-offs faced by consumers and producers builds this skill.
Empathy: Understanding that decisions are rarely purely rational supports nuanced thinking.
You could simulate a classroom activity where students role-play as business owners deciding between profit maximisation and customer welfare. Let them experience the tensions in real time.
Careers Links
Economic decision-making is relevant across countless sectors. It links particularly well with:
Marketing: Understanding consumer habits is essential.
Management: Business leaders must balance financial and ethical goals.
Behavioural economics: A growing field, especially in public health and finance.
This supports Gatsby Benchmarks 4, 5 and 6 — linking curriculum to careers, encounters with employers, and real-world contexts. Consider inviting a guest speaker in retail or social enterprise to discuss how these decisions are made in practice.
Teaching Notes
Tips
Use live polling tools to challenge students on their own buying behaviour.
Bring in examples from current events (e.g. ethical brands choosing not to cut staff despite falling profits).
Prompt discussion with “Would you rather?” economic dilemmas.
Common Pitfalls
Students often take models at face value. Emphasise that assumptions are simplifications.
Some may struggle with evaluating both sides of an argument. Scaffolding is key.
Extension ideas
Explore behavioural economics further with real-life scenarios.
Let students survey peers on spending habits and compare to textbook theory.
Introduce case studies where profit was deprioritised for reputation or social value.
