2281 · 1.1
Common exam mistakes on 2281 The nature of the economic problem. Learn what loses marks, then practise the topic with Examiner’s Ink.
In exams, always use the precise terminology for the four factors of production. Stating 'money' as a factor of production instead of 'capital' is a common error that will lose marks. Remember, capital refers to physical assets used for production.
Always state opportunity cost as the specific alternative forgone, not 'time' or 'money' alone. Examiners reject vague OC definitions.
No. In A-Level Economics, money is a medium of exchange used to acquire factors of production. It is not a productive resource in itself. The factor 'Capital' refers specifically to physical, man-made assets like machinery, equipment, and buildings that are used to produce other goods and services.
No, opportunity cost is a broader concept. It represents the next best alternative, which may not have a direct monetary value. For example, the opportunity cost of you spending two hours studying for an economics exam could be the two hours of sleep you have forgone. The 'cost' is the lost sleep, not a specific sum of money.
Yes, absolutely. While the consumer does not pay a monetary price for the second item, its production still required the use of scarce resources (land, labour, capital). These resources could have been used to produce something else. Therefore, from society's perspective, there is an opportunity cost. Nothing is truly free as long as it is produced using scarce resources.