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  • Welcome to the CP Subject Centre
  • Faria Education Group
  • Core
    • Service Learning
    • Language Development
    • Reflective Project
    • Personal and Professional Skills
  • Career-related Study
  • Studies in language and literature
    • Language and Literature
      • Aims & Objectives
      • Syllabus
        • Area of Exploration - Readers, Writers and Texts
        • Area of Exploration - Time and Space
        • Area of Exploration - Intertextuality: Connecting Texts
        • Development of Linguistic Skills
        • Conceptual Understanding
        • Non-Literary Texts
      • Assessment
    • Literature
      • Aims and Objectives
      • Syllabus
        • Areas of Exploration
        • Development of Linguistic Skills
        • Conceptual Understanding
      • Assessment
    • Classical Languages (Last Assessment 2023)
      • Aims & Objectives
      • Syllabus
        • Part 1: Study of Language
        • Part 2: Study of Literature
        • Part 3: Individual study
      • Assessment
    • Classical Languages (First Assessment 2024)
    • Literature and Performance (First Assessment 2024)
  • Language acquisition
    • Language Ab Initio
      • Aims & Objectives
      • Syllabus
        • Identities
        • Experiences
        • Human Ingenuity
        • Social Organization
        • Sharing the Planet
        • Texts
      • Assessment
    • Language B
      • Aims & Objectives
      • Syllabus
        • Identities
        • Experiences
        • Human Ingenuitiy
        • Social Organization
        • Sharing the Planet
        • Texts
      • Assessment
  • Individuals and societies
    • Business Management (Last Assessment 2023)
      • Aims & Objectives
      • Syllabus
        • Unit 1: Business Organization and Environment
        • Unit 2: Human Resource Management
        • Unit 3: Finance and Accounts
        • Unit 4: Marketing
        • Unit 5: Operations Management
      • Assessment
    • Business Management (First Assessment 2024)
    • Digital Society
    • Economics
      • Aims & Objectives
      • Syllabus
        • Unit 1: Introduction to Economics
        • Unit 2: Microeconomics
          • Real-world issue 1
          • Real-world issue 2
        • Unit 3: Macroeconomics
          • Real-world issue 1
          • Real-world issue 2
        • Unit 4: The Global Economy
          • Real-world issue 1
          • Real-world issue 2
      • Assessment
    • Geography
      • Aims & Objectives
      • Syllabus
        • Part one: Geographic themes (SL and HL options)
          • Option A: Freshwater
          • Option B: Oceans and coastal margins
          • Option C: Extreme environments
          • Option D: Geophysical hazards
          • Option E: Leisure, tourism and sport
          • Option F: Food and health
          • Option G: Urban environments
        • Part two: Geographic perspectives - global change (SL and HL core)
          • Unit 1: Changing population
          • Unit 2: Global climate - vulnerability and resilience
          • Unit 3: Global resource consumption and security
        • Part two: Geographic perspectives - global change (HL core extension)
          • Unit 4: Power, places and networks
          • Unit 5: Human development and diversity
          • Unit 6: Global risks and resilience
      • Assessment
    • Global Politics
      • Aims & Objectives
      • Syllabus
        • Engagement Activity
        • Core
        • Additional Higher Level
      • Assessment
    • History
      • Aims & Objectives
      • Syllabus
        • Prescribed Subjects
        • World History Topics
        • HL Options: Depth Studies - History of Africa and the Middle East
        • HL Options: Depth Studies - History of the Americas
        • HL Options: Depth Studies - History of Asia and Oceania
        • HL Options: Depth Studies - History of Europe
      • Assessment
    • Information Technology in a Global Society
      • Aims & Objectives
      • Syllabus
        • Strand 1: Social and Ethical Significance
        • Strand 2: Application to Specific Scenarios
        • Strand 3: IT Systems
        • The Project (practical application of IT skills)
      • Assessment
    • Philosophy
      • Aims & Objectives
      • Syllabus
        • Prescribed Texts
        • Core
        • Additional Higher Level
        • Options
      • Assessment
    • Psychology
      • Aims & Objectives
      • Syllabus
        • Core
          • Biological approach to understanding behaviour
          • Cognitive approach to understanding behaviour
          • Sociocultural approach to understanding behaviour
          • Approaches to researching behaviour
        • Options
          • Abnormal psychology
          • Developmental psychology
          • Health psychology
          • Psychology of human relationships
      • Assessment
    • Social and Cultural Anthropology
      • Aims & Objectives
      • Syllabus
        • Part 1: Engaging with Anthropology
          • The language of anthropology
          • The practice of anthropology
          • Anthropological thinking
        • Part 2: Engaging with Ethnography
          • Group 1
          • Group 2
          • Group 3
        • Part 3: Engaging with Anthropological Practice
      • Assessment
    • World Religions
      • Aims & Objectives
      • Syllabus
        • Part 1: Introduction to World Religions
        • Part 2: In-depth Studies
        • Part 3: Internal Assessment
      • Assessment
  • Sciences
    • Biology (FA 2025)
    • Biology (LA 2024)
      • Aims & Objectives
      • Syllabus
        • Core
          • 1. Cell biology
          • 2. Molecular biology
          • 3. Genetics
          • 4. Ecology
          • 5. Evolution and biodiversity
          • 6. Human physiology
        • Additional Higher Level
          • 7. Nucleic acids
          • 8. Metabolism, cell respiration and photosynthesis
          • 9. Plant biology
          • 10. Genetics and evolution
          • 11. Animal physiology
        • Options
          • Option A: Neurobiology and behaviour
          • Option B: Biotechnology and bioinformatics
          • Option C: Ecology and conservation
          • Option D: Human physiology
      • Assessment
    • Chemistry (FA 2025)
    • Chemistry (LA 2024)
      • Aims & Objectives
      • Syllabus
        • Core
          • 1. Stoichiometric relationships
          • 2. Atomic structure
          • 3. Periodicity
          • 4. Chemical bonding and structure
          • 5. Energetics/thermochemistry
          • 6. Chemical kinetics
          • 7. Equilibrium
          • 8. Acids and bases
          • 9. Redox processes
          • 10. Organic chemistry
          • 11. Measurement and data processing
        • Additional Higher Level
          • 12. Atomic structure
          • 13. The periodic table - the transition metals
          • 14. Chemical bonding and structure
          • 15. Energetics/thermochemistry
          • 16. Chemical kinetics
          • 17. Equilibrium
          • 18. Acids and bases
          • 19. Redox processes
          • 20. Organic chemistry
          • 21. Measurement and analysis
        • Options
          • A. Materials
          • B. Biochemistry
          • C. Energy
          • D. Medicinal chemistry
      • Assessment
    • Computer Science (FA 2025)
    • Computer Science (LA 2024)
      • Aims & Objectives
      • Syllabus
        • Core
          • Topic 1 - System fundamentals
          • Topic 2 - Computer organization
          • Topic 3 - Networks
          • Topic 4 - Computational thinking, problem-solving and programming
        • Additional Higher Level
          • Topic 5 - Abstract data structures
          • Topic 6 - Resource management
          • Topic 7 - Control
        • Options
          • A - Databases
          • B - Modelling and simulation
          • C - Web science
          • D - Object-oriented programming
      • Assessment
    • Design Technology
      • Aims & Objectives
      • Syllabus
        • Core
          • 1. Human factors and ergonomics
          • 2. Resource management and sustainable production
          • 3. Modelling
          • 4. Final production
          • 5. Innovation and design
          • 6. Classic design
        • Additional Higher Level
          • 7. User-centred design (UCD)
          • 8. Sustainability
          • 9. Innovation and markets
          • 10. Commercial production
      • Assessment
    • Nature of Science
      • Aims & Objectives
      • Syllabus
        • Introduction
        • Part A - Concepts
        • Part B - The Quest for Understanding
        • Part C - The Impact of Science
        • Part D - Challenges and the Future
      • Assessment
    • Physics (FA 2025)
    • Physics (LA 2024)
      • Aims & Objectives
      • Syllabus
        • Core
          • 1. Measurements and uncertainties
          • 2. Mechanics
          • 3. Thermal physics
          • 4. Waves
          • 5. Electricity and magnetism
          • 6. Circular motion and gravitation
          • 7. Atomic, nuclear and particle physics
          • 8. Energy production
        • Additional Higher Level
          • 9. Wave phenomena
          • 10. Fields
          • 11. Electromagnetic induction
          • 12. Quantum and nuclear physics
        • Options
          • A. Relativity
          • B. Engineering physics
          • C. Imaging
          • D. Astrophysics
      • Assessment
    • Sports, Exercise and Health Science
      • Aims & Objectives
      • Syllabus
        • Core
          • Topic 1: Anatomy
          • Topic 2: Exercise physiology
          • Topic 3: Energy systems
          • Topic 4: Movement analysis
          • Topic 5: Skill in sports
          • Topic 6: Measurement and evaluation of human performance
        • Additional Higher Level
          • Topic 7: Further anatomy
          • Topic 8: The endocrine system
          • Topic 9: Fatigue
          • Topic 10: Friction and drag
          • Topic 11: Skill acquisition and analysis
          • Topic 12: Genetics and athletic performance
          • Topic 13: Exercise and immunity
        • Options
          • Option A: Optimizing physiological performance
          • Option B: Psychology of sports
          • Option C: Physical activity and health
          • Option D: Nutrition for sports, exercise and health
      • Assessment
  • Mathematics
    • Mathematics: analysis and approaches
      • Aims & Objectives
      • Syllabus
        • Topic 1: Numbers and Algebra
        • Topic 2: Functions
        • Topic 3: Geometry and Trigonometry
        • Topic 4: Statistics and Probability
        • Topic 5: Calculus
      • Assessment
    • Mathematics: applications and interpretation
      • Aims & Objectives
      • Syllabus
        • Topic 1: Number and Algebra
        • Topic 2: Functions
        • Topic 3: Geometry and Trigonometry
        • Topic 4: Statistics and Probability
        • Topic 5: Calculus
      • Assessment
  • The arts
    • Dance
      • Aims & Objectives
      • Syllabus
        • Composition and Analysis
        • World Dance Studies
        • Performance
      • Assessment
    • Film
      • Aims & Objectives
      • Syllabus
        • Reading Film
        • Contextualizing Film
        • Exploring Film Production Roles
        • Collaboratively Producing Film (HL only)
      • Assessment
    • Music
      • Aims & Objectives
      • Syllabus
        • Areas of Inquiry
        • Contexts
        • Musical Processes
        • Musical Roles
        • Exploring Music in Context
        • Experimenting with Music
        • Presenting Music
      • Assessment
    • Theatre (Last Assessment 2023)
      • Aims & Objectives
      • Syllabus
        • Theatre in Context
        • Theatre Processes
        • Presenting Theatre
      • Assessment
    • Theatre (First assessment 2024)
    • Visual Arts
      • Aims & Objectives
      • Syllabus
        • Visual Arts in Context
        • Visual Arts Methods
        • Communicating Visual Arts
        • The Visual Arts Journal
        • Art-making Forms
        • Research
      • Assessment
  • Interdisciplinary courses
    • Literature and Performance
      • Aims and Objectives
      • Syllabus
        • Part 1: Critical Study of Texts
        • Part 2: Exploration of the Chose Approach to the Text
        • Part 3: Realization of Texts in Performance
        • Prescribed Literature in Translation
      • Assessment
    • Environmental Systems & Societies
      • Aims & Objectives
      • Syllabus
        • Topic 1: Foundations of environmental systems and societies
        • Topic 2: Ecosystems and ecology
        • Topic 3: Biodiversity and conservation
        • Topic 4: Water and aquatic food production systems and societies
        • Topic 5: Soil systems and terrestrial food production systems and societies
        • Topic 6: Atmospheric systems and societies
        • Topic 7: Climate change and energy production
        • Topic 8: Human systems and resource use
      • Assessment
  • School-based syllabuses
    • Art History
      • Aims & Objectives
      • Syllabus
        • Topic 1: The Art and Architecture of Ancient Greece
        • Topic 2: Rome - Republic and Empire
        • Topic 3: The Middle Ages
        • Topic 4: Romanesque and Gothic Art and Architecture
        • Topic 5: The Art of the Renaissance
        • Topic 6: The Baroque Age - Art and the Architecture of 17th-century Europe
        • Topic 7: The 'Age of Reason' to 'Romanticism'
        • Topic 8: Experiments in the 19th- and 20th-century Art
      • Assessment
    • Astronomy
      • Aims & Objectives
      • Syllabus
        • Topic 1: The Stars
        • Topic 2: The Planets
        • Topic 3: Galaxies
        • Topic 4: Cosmology
      • Assessment
    • Brazilian Social Studies
      • Aims & Objectives
      • Syllabus
        • Topic 1: The Construction of Brazilian Geographical Space
        • Topic 2: Brazil in the Globalization Era - Core Topic
        • Topic 3: The Demographic and Urban Dynamics of Contemporary Brazil
        • Topic 4: Environment and Society
        • Topic 5: From Discovery to the End of the Colonial Era (1500-1822)
        • Topic 6: The Monarchical Experience (1822-1889)
        • Topic 7: Early Republican Brazil (1889-1945) - Core Topic
        • Topic 8: Contemporary Brazil (1945 - )
      • Assessment
    • Classical Greek and Roman Studies
      • Aims & Objectives
      • Syllabus
        • Part A - Two Topics from the Following Four Options
        • Part B - Two Topics from the Following Four Options
      • Assessment
    • Food Science and Technology
      • Aims & Objectives
      • Syllabus
        • 1. Nutrition
        • 2. Materials, Component and Their Application
        • 3. Food Quality and Safety
        • 4. Food Process Engineering
      • Assessment
    • Marine Science
      • Aims & Objectives
      • Syllabus
        • Core
          • Topic 1 Origin and Structure of Oceans
          • Topic 2 Dynamics of Earth's Crust
          • Topic 3 Patterns of Water Movement
          • Topic 4 Properties of Ocean Water
          • Topic 5 Life in Oceans
        • Options
          • A. Marine ecosystems and conservation
          • B. Atmosphere, ocean and climate
          • C. Geology of ocean basins
      • Assessment
    • Modern History of Kazakhstan
      • Aims & Objectives
      • Syllabus
        • Topic 1. Kazakhstan at the Beginning of the 20th Century
        • Topic 2. Kazakhstan During the Civil Confrontation (1917-1920)
        • Topic 3. The Formation of the Soviet Union and Kazakhstan (1920-1940)
        • Topic 4. The Great Patriotic War and Kazakhstan (1941-1945)
        • Topic 5. Kazakhstan and the Socialism (1946-1985)
        • Topic 6. Kazakhstan: from Perestroika to independence
      • Assessment
    • Political Thought
      • Aims & Objectives
      • Syllabus
        • Topic 1: Political Thinkers
        • Topic 2: Political Concepts
      • Assessment
    • Turkey in the 20th Century
      • Aims & Objectives
      • Syllabus
        • Turkey at the Beginning of the 20th Century
        • Topic 2: The Foundations of the Turkish Republic 1923-1945
        • Topic 3: The Global Changes Between the World Wars and Their Effect on Turkey 1918-1939
        • Topic 4: Turkey under pressure during World War II
        • Topic 5: Reconstruction, democracy and developments in the region 1945-1985
        • Topic 6: The Effects of Globalization and the Dialogue with Europe 1985-2000
      • Assessment
    • World Arts and Cultures
      • Aims & Objectives
      • Syllabus
        • Part 1: Prescribed Topics
        • Part 2: Intercultural Studies
        • Part 3: Regional Study
      • Assessment
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On this page
  • Conceptual understandings
  • 1.1 What is economics?
  • 1.2 How do economists approach the world?
  • Theory of knowledge questions
  1. Individuals and societies
  2. Economics
  3. Syllabus

Unit 1: Introduction to Economics

Conceptual understandings

  • Economics is a social science characterized by interdependence, which focuses on how people interact with each other to improve their economic well-being, influenced and enabled by their values and their natural surroundings.

  • The economic world is dynamic in nature and constantly subject to change.

  • Economic theories are based on logic and empirical data, using models to represent and analyse this complex reality. Individual and collective motivations and behaviours are complex and diverse, and their understanding entails the interaction of a variety of disciplines such as philosophy, politics, history, and psychology.

  • Economic decision-making impacts the relative economic well-being of individuals and societies.

  • The central problems of economics are scarcity and choice. This forces societies to face trade-offs, opportunity costs and the challenge of sustainability.

  • Debates exist in economics regarding the potential conflicts between economic growth and equity and between free markets and government intervention.

  • Endless economic growth, based on the consumption of finite resources, cannot continue indefinitely. New economic models and social movements have challenged mainstream opinion about the purpose of growth and how the economy could be redesigned to support long-term prosperity.

  • Key concepts: scarcity, choice, efficiency, equity, economic well-being, sustainability, change, interdependence, intervention.

1.1 What is economics?

  • Economics as a social science

    • The social nature of economics

    • The basis of the study of economics: microeconomics and macroeconomics

    • Introduction to the nine central concepts: scarcity, choice, efficiency, equity, economic well-being, sustainability, change, interdependence, intervention

  • The problem of choice

    • Factors of production—land, labour, capital and entrepreneurship

    • Scarcity

      • Unlimited human needs and wants to be met by limited resources

      • Scarcity and sustainability

    • Opportunity cost

      • The cost of choice

      • Free goods

    • The basic economic questions

      • What/how much to produce, how to produce and for whom to produce?

    • Means of answering the economic questions

      • Market versus government intervention

      • Economic systems: free market economy, planned economy and mixed economy

  • The production possibilities curve model (PPC)

    • Assumptions of the model

    • Increasing versus constant opportunity cost

    • Features of the model: opportunity cost, scarcity, choice, unemployment of resources, efficiency, actual growth and growth in production possibilities

  • Diagram: PPC illustrating choice and opportunity cost, unemployment of resources, actual growth and growth in production possibilities

  • Diagram: PPC showing increasing versus constant opportunity cost

  • Modelling the economy

    • The circular flow of income model

    • Interdependence between economic decision-makers interacting and making choices in an economy: households, firms, the government, the banks and financial sector, and the foreign sector (foreign firms and households)

    • Leakages and injections

  • Diagram: circular flow of income model, with leakages and injections

1.2 How do economists approach the world?

  • Economic methodology

    • The role of positive economics

      • The use of logic

      • The use of hypotheses, models, theories

      • The ceteris paribus assumption

      • Empirical evidence

      • Refutation

    • The role of normative economics

      • Value judgments in policy making

      • The meaning of equity and equality

  • Economic thought

    • Origin of economic ideas in a historical context

      • 18th century: Adam Smith and laissez faire

      • 19th century: classical microeconomics (utility); the concept of the margin; Classical macroeconomics (Say’s law); Marxist critique of classical economic thought

      • 20th century: Keynesian revolution; rise of macroeconomic policy; monetarist/new classical counter revolution

      • 21st century: increasing dialogue with other disciplines such as psychology and the growing role of behavioural economics; increasing awareness of the interdependencies that exist between the economy, society and environment and the need to appreciate the compelling reasons for moving toward a circular economy

Theory of knowledge questions

  • How realistic are economic models? How can we know what to include or exclude in a model?

  • What assumptions do economists make when they apply economic theories to the real world?

  • Many economists argue that economics as a social science is in its infancy, and that with time, as empirical testing methods and the quality of data improve, it will become more reliable in making accurate predictions. Do you agree with this statement?

  • To what extent does the distinction between positive and normative statements exist in other academic disciplines?

  • To what extent have individuals shifted the paradigms of economics?

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