VCE Economics Units 1 & 2

Course Description

Students get to explore the foundations of all economics concepts. They are introduced to a basic microeconomic model that explains changes in relation to supply and demand. They further explore factors that affect the way resources are allocated in an economy and how market power can affect living standards.

Key Knowledge Points
  • the basic economic problem of relative scarcity and the need for economic decision making
  • the concept and applications of opportunity cost
  • resources used to meet needs and wants: natural, labour and capital
  • the effect of technology on business behaviour and the trade in goods and services
  • how businesses might respond to positive and negative incentives
  • the traditional economic viewpoint of consumer behaviour such as rationality, ordered preferences, informed decision making and marginal benefits from consumption
  • the effect of technology on business behaviour and the trade in goods and services
  • aggregate supply
  • aggregate demand and its components
  • the nature and meaning of trade-offs in economics
  • the meaning and measurement of economic growth using real Gross Domestic Product (GDP) and real GDP per capita
  • the meaning of both long-term economic prosperity and environmental sustainability
  • alternative economic indicators of living standards

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