Everyone has wants that are unlimited, but resources are limited. Economics is the study of how we choose.
🎯 Needs, wants and scarcity
Needs are essentials for life: food, water, shelter, clothing. Wants are things we would like but can live without. Scarcity means there is not enough of something to satisfy everyone’s wants. Because of scarcity we must choose. The resources used to make goods are called factors of production: land, labour, capital (tools and machines) and enterprise (entrepreneurs).
need: bread, water, a coat in winter
want: a new phone, designer shoes
factors: land, labour, capital, enterprise
🖼️ See it
Because resources are limited, choosing one thing means giving up another. What you give up is the opportunity cost.
⚖️ Opportunity cost
Every choice has an opportunity cost: the value of the next best alternative you give up. If you spend an hour studying instead of playing sport, the opportunity cost is the sport. Governments face this too: money spent on a stadium cannot be spent on a hospital.
$10: cinema or a book?
choose the cinema → opportunity cost = the book
$100 budget: school shoes ($60) or a game ($60)
you can afford only one
Opportunity cost is not the total of everything you give up — only the best alternative.
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Need
Which of these is a need?
Life essentials.
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Scarcity
Scarcity means:
Limited supply.
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Capital
In economics, “capital” as a factor of production means:
Tools.
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Opportunity cost
Opportunity cost is:
What you miss.
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You have $20. A movie ticket costs $12 and a book costs $8.
If you buy both, how much money is left?
Enter an exact answer, without rounding.
$
Add the prices.
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You have $50 and can buy a jacket for $35 or 7 comics at $5 each.
How many comics cost the same as the jacket?
Enter an exact answer, without rounding.
Divide.
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A farmer can grow 100 kg of wheat or 150 kg of potatoes on the same field.
How many kg of potatoes is the opportunity cost of growing wheat?
Enter an exact answer, without rounding.
kg
The alternative.
📝 Lesson quiz · 5 questions
0 / 5
Re-read the lesson, then give it another go.
Question 1 of 5
Which is a factor of production?
Question 2 of 5
Why do we have to make choices?
Question 3 of 5
An entrepreneur:
Question 4 of 5
Which is a want?
Question 5 of 5
Choosing between two options, the opportunity cost of option A is:
Lesson 2 · Money
💵 Money & Banking
Money makes trade easy. Banks keep it safe and help it grow.
🪙 What money does
Before money people used barter, trading goods for goods, which needs a double coincidence of wants. Money solves this. It works as a medium of exchange, a unit of account (prices), a store of value and a way to make deferred payments. Good money is durable, portable, divisible, scarce and acceptable.
barter: I have fish, you have wheat; we must both want what the other has
money: sell fish for $5, buy wheat with $5
🖼️ See it
Banks pay savers a little interest and charge borrowers more; the difference pays the bank’s costs and profit.
🏦 Banks, interest and inflation
A bank keeps deposits safe and lends money. You earn interest on savings; borrowers pay interest on loans. Simple interest = principal × rate × time. Inflation is a general rise in prices, which lowers what money can buy. Today most money is digital: cards, transfers and mobile payments.
$200 saved at 5% simple interest for 3 years
interest = 200 × 0.05 × 3 = $30
total = $230
inflation 4%: $100 item costs $104 next year
Real value matters. If your interest rate is lower than inflation, your savings lose buying power.
✏️ Quick check · 1 of 7
Barter
Barter is:
Goods for goods.
✏️ Quick check · 2 of 7
Function
Money as a “store of value” means:
Saving.
✏️ Quick check · 3 of 7
Interest
Interest is:
Money on money.
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Inflation
Inflation is a:
Prices up.
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You save $200 at 5% simple interest for 3 years.
How much interest do you earn, in $?
Enter an exact answer, without rounding.
$
P × r × t.
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A loan of $1000 has 8% simple interest per year.
How much interest is paid after 2 years, in $?
Enter an exact answer, without rounding.
$
P × r × t.
✍️ Type your answer · 7 of 7
A bike costs $100 today and prices rise 4% over a year.
What will it cost next year, in $?
Enter an exact answer, without rounding.
$
4% of 100 is 4.
📝 Lesson quiz · 5 questions
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Re-read the lesson, then give it another go.
Question 1 of 5
Which is a feature of good money?
Question 2 of 5
A deposit is:
Question 3 of 5
The borrower pays:
Question 4 of 5
Mobile payments are an example of:
Question 5 of 5
If inflation is 3% and interest is 1%, your savings:
Lesson 3 · Personal finance
📒 Budgeting & Saving
A plan for your money helps you reach your goals and avoid surprises.
📝 Making a budget
A budget compares income (money coming in) with expenses (money going out). Expenses can be fixed (rent) or variable (food, fun). A surplus means income > expenses; a deficit means expenses > income. A common rule is 50/30/20: 50% needs, 30% wants, 20% saving.
A simple rule of thumb: half of income for needs, 30% for wants, and 20% for saving or paying off debt.
🎯 Saving and goals
Set SMART goals: specific, measurable, achievable, relevant, time-bound. An emergency fund of 3–6 months of expenses protects you from shocks. Compound interest earns interest on interest, so starting early matters. To reach a goal, divide the cost by the number of months.
goal: $240 for a bike in 12 months
save 240 / 12 = $20 a month
compound: $100 at 10% → $110 after year 1, $121 after year 2
Pay yourself first. Move savings out of your spending money as soon as you receive income.
✏️ Quick check · 1 of 7
Budget
A budget is:
A money plan.
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Deficit
A deficit means:
Short.
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Fixed expense
Which is a fixed expense?
Regular.
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Compound
Compound interest is interest on:
Interest on interest.
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Your income is $1000 and you follow 50/30/20.
How much should you save?
Enter an exact answer, without rounding.
$
20%.
✍️ Type your answer · 6 of 7
You want to save $240 in 12 months for a bike.
How much must you save each month?
Enter an exact answer, without rounding.
$
Divide.
✍️ Type your answer · 7 of 7
You deposit $100 at 10% compound interest.
What is the balance after 2 years, in $?
Enter an exact answer, without rounding.
$
Compound each year.
📝 Lesson quiz · 5 questions
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Re-read the lesson, then give it another go.
Question 1 of 5
A surplus is when:
Question 2 of 5
An emergency fund is for:
Question 3 of 5
Which is a variable expense?
Question 4 of 5
Starting to save early is helpful because of:
Question 5 of 5
SMART goals are:
Lesson 4 · Markets
🛒 Supply, Demand & Prices
Prices are set by the interaction of buyers and sellers in a market.
📉 Demand and supply
Demand is how much buyers are willing and able to purchase at each price. When price rises, quantity demanded falls (the law of demand). Supply is how much producers will sell at each price. When price rises, quantity supplied rises. The equilibrium price is where quantity demanded equals quantity supplied.
Where the two lines cross, the amount buyers want equals the amount sellers offer, and the price settles.
🔄 What shifts them
Demand shifts with income, tastes, population and the prices of substitutes (tea and coffee) and complements (cars and petrol). Supply shifts with costs, technology, weather and taxes. A hot summer raises demand for ice cream and its price; a bad harvest cuts supply and raises prices.
bad wheat harvest → supply falls → price rises
new efficient machine → supply rises → price falls
hot weather → ice cream demand rises → price rises
A price change moves along the curve; other changes shift the curve.
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Law of demand
According to the law of demand, if price rises, quantity demanded:
Inverse.
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Equilibrium
The equilibrium price is where:
Balance.
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Shortage
A shortage means:
Too little.
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Substitute
Tea and coffee are:
Alternatives.
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At $2, demand is 100 and supply is 40.
What is the shortage, in units?
Enter an exact answer, without rounding.
units
Subtract.
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At $6, demand is 30 and supply is 90.
What is the surplus, in units?
Enter an exact answer, without rounding.
units
Subtract.
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A seller charges $4 and sells 60 units.
What is the revenue, in $?
Enter an exact answer, without rounding.
$
Price × quantity.
📝 Lesson quiz · 5 questions
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Re-read the lesson, then give it another go.
Question 1 of 5
A bad harvest will usually:
Question 2 of 5
Complements are goods:
Question 3 of 5
A surplus puts pressure on prices to:
Question 4 of 5
Technology that lowers costs will:
Question 5 of 5
Which would raise demand for umbrellas?
Lesson 5 · Economy
🧑🏭 Work, Business & Taxes
Businesses create jobs and goods. Taxes pay for public services that everyone uses.
🏢 Types of business
A sole trader is owned by one person; a partnership by two or more; a company has shareholders and limited liability. Profit = revenue − costs. Fixed costs (rent) do not change with output; variable costs (materials) do. Wages depend on skills and demand for the job. Productivity is output per worker or per hour.
revenue $5000, costs $3800 → profit $1200
productivity: 120 items in 8 hours → 15 per hour
fixed cost $200 + variable $3 per unit
50 units: 200 + 150 = $350
🖼️ See it
Money moves round the economy: wages become spending and taxes, which pay businesses, public workers and services.
🏛️ Taxes and public goods
Taxes fund public services such as schools, roads, healthcare and defence. Income tax is paid on earnings; sales tax (VAT) on purchases; property tax on land and buildings. A public good (such as a street light) benefits everyone and no one can be easily excluded. A progressive tax takes a larger share from higher incomes.
income tax 20% on $500 → $100
VAT 10% on $80 item → $8 → price $88
progressive: 10% on first $1000, 20% above
Everyone benefits from public services. That is why taxes are compulsory.
✏️ Quick check · 1 of 7
Profit
Profit equals:
Take away costs.
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Fixed cost
A fixed cost:
Constant.
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Public good
A public good is:
Shared.
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VAT
VAT is a tax on:
Spending.
✍️ Type your answer · 5 of 7
A business has revenue of $5000 and costs of $3800.
What is its profit, in $?
Enter an exact answer, without rounding.
$
Subtract.
✍️ Type your answer · 6 of 7
A worker makes 120 items in 8 hours.
What is the productivity, in items per hour?
Enter an exact answer, without rounding.
/h
Divide.
✍️ Type your answer · 7 of 7
A $80 item has 10% VAT added.
What is the final price, in $?
Enter an exact answer, without rounding.
$
Add 10%.
📝 Lesson quiz · 5 questions
0 / 5
Re-read the lesson, then give it another go.
Question 1 of 5
A shareholder is:
Question 2 of 5
A progressive tax:
Question 3 of 5
Which is a variable cost?
Question 4 of 5
Taxes are used to pay for:
Question 5 of 5
Higher productivity usually leads to:
Final Challenge
🏆 10-Question Challenge Quiz
Questions from every topic in this course. Pick an answer for each one, then hit Check My Answers.
0 / 10
💪 Keep practicing — go back through the lessons and retake the quiz!
Q1 · Scarcity & Choice
Economics studies:
Q2 · Scarcity & Choice
Choosing between two options, the opportunity cost of option A is:
Q3 · Money & Banking
A problem solved by money compared with barter is the:
Q4 · Money & Banking
If inflation is 3% and interest is 1%, your savings: