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Economic theory

The economic problem

Scarcity and choice, what a decision costs, and how people actually decide.

Start: Scarcity and choice

The 8 modules

Each module teaches one idea: a definition, how it works, and questions through the page. Take them in any order.

1Scarcity and choiceSay why every choice means giving something upConcept · 7 min · Free 2Opportunity costSay what a choice costs, not just what it costs in moneyConcept · 6 min 3The production possibility frontierRead a PPF and say what a point inside it meansDiagram · 6 min 4Positive and normative statementsTell a positive statement from a normative oneTell them apart · 6 min 5Specialisation and the division of labourSay what specialisation is and why it raises outputConcept · 6 min 6Factors of productionSort an input into the right factor of productionTell them apart · 6 min 7Market, command and mixed economiesTell the three ways an economy can allocate resourcesTell them apart · 6 min 8Do people actually decide rationally?Weigh the case each way on the rational-choice assumptionDebate · 7 min