Syllabus: AQA AS Economics
Module: The Operation of Markets and Market Failure
Lesson: 3.1.1 Economic Methodology and the Economic Problem

Introduction

The AQA AS Economics curriculum outlines 3.1.1 Economic Methodology and the Economic Problem as the foundation of students’ understanding of economics as a discipline. It explores how economists approach the world, make decisions, and solve resource allocation challenges. This section develops critical thinking, analytical reasoning, and an appreciation of the limits of economic models. It is crucial that teachers present these ideas both conceptually and practically, bridging the gap between economic theory and real-world application.

Key Concepts

Students must understand the following:

• The nature and purpose of economic activity: examining how societies use limited resources to meet needs and wants.

• The economic problem: scarcity of resources, choice, and opportunity cost.

• Positive and normative economic statements: recognising objective analysis versus value judgments.

• The role of value judgments in economic decision making and policy: how different priorities influence outcomes.

• The use of models in economics: simplifying reality to understand and predict economic behaviour.

• Ceteris paribus: the importance of holding other variables constant when examining economic relationships.

• The scientific method in economics: applying hypothesis testing, gathering evidence, and drawing conclusions within an economic context.

These topics align precisely with the AQA specification and form the bedrock for later, more complex areas of study.

Real-World Relevance

Economic methodology and the economic problem are not abstract academic exercises. For example, during the COVID-19 pandemic, governments had to make choices about allocating scarce medical resources. Deciding between spending on healthcare or economic support packages illustrated the practical implications of opportunity cost and resource allocation. Similarly, debates around climate change policies reveal how normative economic statements, influenced by societal values, shape government responses to global challenges.

A mini case study could involve analysing the government’s furlough scheme, assessing how economists predicted outcomes, measured opportunity costs, and advised on the best use of finite fiscal resources.

How It’s Assessed

Students will encounter a range of question styles:

• Short answer questions testing knowledge of definitions and basic concepts (e.g. define opportunity cost).

• Data response questions requiring interpretation of economic data or application of models.

• Extended written responses assessing evaluation skills, particularly distinguishing positive and normative statements and discussing the role of value judgments. Key command words include explain, analyse, evaluate, and discuss.

Examiners reward:

• Clear definitions and logical explanations.

• Application to given contexts, not just theoretical answers.

• Balanced arguments with reasoned conclusions.

Enterprise Skills Integration

Teaching this topic supports the development of enterprise skills such as:

• Problem-solving: Identifying key constraints and making informed decisions.

• Critical thinking: Questioning assumptions, evaluating evidence, and making balanced judgments.

• Decision-making: Weighing alternatives and assessing opportunity costs effectively. Classroom activities such as economic simulations or resource allocation games can help students actively apply these skills.

Careers Links

Understanding economic methodology and the economic problem is essential preparation for careers such as:

• Economist (policy, corporate, environmental)

• Data Analyst

• Financial Planner

• Government Advisor

• Business Consultant

This topic directly supports Gatsby Benchmark 4 (linking curriculum learning to careers) and Benchmark 5 (encounters with employers and employees) by providing a strong foundation for meaningful career conversations. Real-world case studies or guest talks from economists can deepen understanding.

Teaching Notes

When teaching this topic, it is important to:

• Emphasise the distinction between positive and normative economics early on, using clear examples.

• Encourage students to consider the assumptions behind economic models and challenge them constructively.

• Use current events regularly to contextualise learning and show the relevance of economic thinking.

• Be mindful that students often conflate scarcity with poverty; focus on clarifying that scarcity is a universal condition, not just a symptom of underdevelopment.

• Extension activities could include asking students to develop their own simple economic models based on a current issue, helping to consolidate their understanding of the scientific method in economics.