Article How does it illustrate the basic economic

problem?

Local anger as an area of ancient woodland is sold to
a property developer to build new homes
Land is scarce and has alternative uses. The benefit
of the woodland will be lost forever if it is cut down
to build homes. However, people need homes to live
in to provide shelter. Keeping the woodland will
mean the benefit of new homes will be foregone.

China closes mines and warns its rare-earth minerals
are running out
Rare-earth minerals are non-renewable natural
resources. They are finite in supply and no more will
be available once they have been used up in the
production of other goods to satisfy human needs
and wants. Future generations may therefore have to
go without many of the products they are used in.

BMW halts car production BMW had to stop production of its cars when one of
its suppliers could not supply it with steering
systems. This shows that cars are economic goods.
Scarce resources must be used up in their production.
Cars can only be produced and wants for cars
satisfied if sufficient resources are available to do so.
Building new schools ‘must be top priority’ for
government
One meal a day’: Consumers on low incomes are
being forced to choose between food and paying
power bills
Population growth is increasing human needs or
wants for education. More resources will be required
to increase the number of school places and teachers.
Because resources are scarce, this means reallocating
some from other uses. Providing more school places
therefore means giving up some other goods or
services
Because resources are scarce, consumers cannot
satisfy all their needs and wants for goods and
services. Some consumers on low incomes cannot
even satisfy all their needs. They must choose how
to allocate them between purchases of different
goods and services to meet their needs. The more
they spend on power for lighting and heating, the
less they will be able to spend on food. The
opportunity cost of meeting their needs for power is
the benefit they forego from eating less food
Article Increase in resources and Decrease in resources and
productive capacity? productive capacity?

Many developing countries are ‘Richer’ developed countries – Developing countries – loss of
losing their better-educated inward migration of skilled labour skilled labour and entrepreneurs
nationals to richer countries … and entrepreneurs due to outward migration

Approximately 75 percent of land Decrease in land … ‘due to

in Uganda could be used for environmental degradation
agriculture … through soil erosion and nutrient
loss’.

Mass migration to England … Increase in migrant labour

New oil reserves ... discovered Increase in land/natural resources

for Canada, Norway, Cuba,
Brazil, Russia and Israel

2 A national economy that has more resources available than previously and has increased its productive
capacity should be able to produce more goods and services. However, its total output will not increase or
will not increase by as much as it could if the additional resources are not used or are not allocated to their
best or most efficient uses. As a result, the economy will be producing at a point below its new PPC.