Syllabus: Cambridge - IGCSE Economics
Module: 1.1 The Nature of the Economic Problem
Lesson: 1.1.1 Finite Resources and Unlimited Wants

Introduction

This article focuses on the first subtopic in the Cambridge IGCSE Economics syllabus: 1.1.1 Finite Resources and Unlimited Wants. This is a foundational concept that introduces learners to the fundamental economic problem and underpins all later topics.

Aligned with the Cambridge IGCSE Economics 0455 specification, this topic prepares students to understand scarcity, choice, and opportunity cost — key to real-world economic thinking. It sets the stage for understanding how individuals, firms, and governments make decisions under constraints, laying the groundwork for more complex economic models.

For teachers, SLT, and careers leads, this topic offers an ideal opportunity to embed commercial awareness, develop problem-solving skills, and connect curriculum learning to real-world resource issues.

Key Concepts

According to the Cambridge IGCSE Economics syllabus, students should understand:

• The Basic Economic Problem: Resources are finite, but human wants are infinite. This mismatch requires choices to be made.

• Scarcity: The condition resulting from limited resources relative to unlimited wants.

• Choice and Opportunity Cost: Because resources are scarce, choices must be made. Opportunity cost is the next best alternative foregone when a choice is made.

• Economic Agents: Consumers, producers, and governments each make decisions about how to allocate scarce resources.

These concepts form the basis for later discussions on market systems, government policy, and global trade.

Real-World Relevance

Case Study: The Global Semiconductor Shortage

The recent shortage of semiconductors illustrates how finite resources and global demand create widespread economic consequences. The chips are crucial in smartphones, cars, and appliances. As consumer demand surged post-pandemic, supply couldn’t keep up, leading to production halts in major industries.

This is a real-world example of scarcity leading to choices: Car manufacturers prioritised high-margin models. Consumers faced higher prices or long wait times — both illustrating opportunity cost.

Local Example: NHS Staffing Allocation

In the UK, the NHS faces constant resource allocation decisions. With a limited number of nurses and doctors, leaders must decide whether to invest in A&E services, preventative care, or elective surgery — again highlighting opportunity cost and scarcity in action.

How It’s Assessed

In Cambridge IGCSE Economics, this topic typically appears in Paper 1 (Multiple Choice) and Paper 2 (Structured Questions).

Assessment Styles:

• Multiple Choice Questions: Define scarcity, identify examples of opportunity cost, recognise choices faced by economic agents.

• Short Structured Responses: Explain the economic problem using diagrams or examples.

• Longer Analysis Questions (6-8 marks): Evaluate decisions made by individuals or governments in the face of limited resources.

Command Words to Focus On:

• Define

• Explain

• Identify

• Analyse

• Evaluate

Students are expected to apply the concept to real-world situations, demonstrating both understanding and commercial awareness.

Enterprise Skills Integration

This topic aligns directly with the Enterprise Skills Framework under:

• Commercial Awareness: Understanding that resources (time, money, staff) must be allocated strategically to generate value.

• Decision-Making & Problem-Solving: Evaluating alternatives based on cost-benefit thinking and long-term consequences.

Classroom activities such as simulations or prioritisation exercises can help students develop a strategic mindset. For example, a budgeting task asking students to allocate £10,000 across competing school projects builds real-world decision-making fluency.

Careers Links

This concept links strongly to Gatsby Benchmarks 4 (Curriculum Learning Linked to Careers) and 5 (Encounters with Employers).

Career Pathways:

• Economists: Make resource allocation decisions at national or global levels.

• Operations Managers: Balance cost and capacity in industries like healthcare or logistics.

• Environmental Consultants: Advise businesses on sustainable resource use.

• Public Sector Analysts: Support decision-making in government departments.

Enterprise Skills tools and employer-supported simulations allow students to apply this theory in realistic workplace scenarios — for example, deciding which new market to enter with limited budget.

Teaching Notes

Recommended Approaches:

• Real-Life Prioritisation Exercises: Ask students to imagine they are a government minister allocating a fixed budget across healthcare, education, and defence.

• Opportunity Cost Challenges: Create classroom debates on the best use of time or money (e.g. “Should the school invest in laptops or library books?”).

• Mini Case Studies: Use local or global examples — such as food bank shortages or water access — to ground the theory in reality.

Common Pitfalls:

• Confusing scarcity with shortage (scarcity is always present, even in wealthy societies).

• Overlooking opportunity cost when making decisions in examples.

• Treating wants as needs – an important distinction in exam contexts.

Extension Ideas:

• Link to sustainability: “How do unlimited wants impact the environment?”

• Introduce ethical discussions: “Should governments always prioritise efficiency over equity?”

Cross-Curricular Links:

• Geography: Population and resource distribution

• Maths: Graph interpretation and resource allocation models

• PSHE/Citizenship: Social impacts of economic decisions