Syllabus: OCR - GCSE Economics
Module: 1. Introduction to Economics
Lesson: 1.2 The Basic Economic Problem
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Introduction
This article supports delivery of OCR’s GCSE Economics (J205), Component 01 – Introduction to Economics. Topic 1.2, “The Basic Economic Problem”, introduces students to the fundamental challenge at the heart of economics: scarcity. The topic sets the tone for active thinking in economics, asking learners to consider how limited resources shape choices made by consumers, producers, and governments. For teachers and departments juggling curriculum coverage and impact, this is a high-leverage topic that underpins later content across both papers.
Key Concepts
According to the OCR syllabus, learners should be able to:
Explain what is meant by scarce resources and unlimited wants – All economic agents face the challenge of limited resources in the face of infinite demands.
Define and explain the basic economic problem – This includes the core allocation questions: What to produce? How to produce it? For whom?
Describe and analyse opportunity cost – Students should understand how opportunity cost influences choices in different economic contexts.
Evaluate the costs and benefits of economic decisions – Particularly considering economic, social, and environmental sustainability.
These foundational concepts prepare students to think critically, weigh trade-offs, and justify choices using logical reasoning and evidence.
Real-World Relevance
Scarcity is not a textbook abstraction. It’s front-page news. From NHS funding decisions to the allocation of housing, the core economic problem plays out daily. A timely classroom example might include:
NHS budget constraints – Choosing between more hospital beds or higher staff wages is a clear application of opportunity cost.
Fast fashion and sustainability – Limited environmental resources and consumer demand raise questions about how we produce and for whom.
Energy supply – The UK’s shift from fossil fuels to renewable energy involves major choices around resource use, long-term sustainability, and social priorities.
Bringing these examples into discussion encourages students to connect theory to the real choices that shape their world.
How It’s Assessed
This topic is assessed in OCR GCSE Economics (J205/01) via a mix of:
Multiple-choice questions testing knowledge of definitions and key terms.
Short-answer questions asking for explanations or examples (e.g., “Explain what is meant by opportunity cost”).
Data-response and scenario-based questions requiring students to apply understanding in context.
Extended response/evaluation tasks (typically 6–9 marks) asking students to weigh up options or justify economic choices.
Command words to emphasise in teaching include:
Explain, analyse, evaluate, draw, and calculate.
Enterprise Skills Integration
This topic lends itself naturally to core enterprise skills, especially:
Decision-making – Students practise justifying resource allocations using opportunity cost frameworks.
Critical thinking – Evaluating trade-offs between economic, social, and environmental outcomes builds real-world reasoning.
Communication – Articulating economic arguments, especially in written form, mirrors the decision justifications required in business.
Enterprise Skills simulations support this by offering students a plug-and-play way to explore the impact of decisions within fictional economic environments. For example, students might roleplay as government advisors allocating a fixed budget between health, education, and transport.
Careers Links
Understanding scarcity and decision-making is fundamental across industries. This topic supports Gatsby Benchmark 4 (Linking curriculum to careers) and Benchmark 5 (Encounters with employers) through:
Public sector roles – Policy analyst, civil servant, urban planner.
Private sector decision-makers – Procurement officer, operations manager.
Environmental economics – Analysts who assess sustainability trade-offs in government or business.
Using job role examples in lessons or inviting guest speakers from local councils or NGOs can enrich career context.
Teaching Notes
Tips:
Start with a simple scarcity activity – allocate a limited number of classroom resources (e.g. chairs, sweets) to highlight trade-offs.
Use real headlines to frame economic decisions – public sector pay rises vs tax cuts work well.
Revisit and reinforce the concept of opportunity cost throughout later units, especially when discussing production, government policy, or markets.
Common Pitfalls:
Students often conflate scarcity with shortage – reinforce that scarcity is a long-term, universal condition.
Opportunity cost is frequently misunderstood as “cost” in money terms – stress it’s the next best alternative foregone.
Learners may default to simplistic reasoning (“We should just make more”) – encourage them to think within constraints.
Extension Activities:
Run a mini-simulation where students are ministers allocating £1 million across competing needs.
Use Enterprise Skills’ Business Simulations as part of an enrichment day to bring these trade-offs to life in a practical, memorable format.
