# Introduction to Economics

> IB Economics SL · IB Economics SL
> Source: https://www.owlsprep.com/study/ib-economics-sl-u1-overview/
> Weight: 10% of overall IB Economics SL exam

This unit lays the foundational concepts for all of IB Economics SL, introducing the core problem of scarcity and the analytical frameworks economists use to study individual and societal decision-making.

**Prerequisites:** No prior formal economics knowledge required

## Learning objectives

- Define core foundational economic concepts including scarcity, choice, and opportunity cost
- Distinguish between positive and normative economics and explain the role of assumptions in economic modeling
- Describe the basic framework that economists use to study decision-making and real-world problems

## Unit at a Glance

This introductory unit establishes the building blocks for every topic you will study in IB Economics SL. We start with the core question that defines the entire discipline, then move to how economists construct models and think about complex real-world problems.

The sequence of this unit builds from a clear definition of what economics actually is, to how economists practice their craft, setting you up to tackle demand, supply and market equilibrium in the next unit.

This unit contains two core sub-topics:
- [What is economics](https://www.owlsprep.com/study/ib-economics-sl-u1-what-is-economics/) — Introduces the fundamental problem of scarcity, choice, opportunity cost, and the split between microeconomics and macroeconomics.
- [How economists approach the world](https://www.owlsprep.com/study/ib-economics-sl-u1-how-economists-approach-the-world/) — Covers economic methodology, assumptions, ceteris paribus, positive vs normative economics, and types of economic systems.

## Common pitfalls

- **Wrong:** Confusing positive and normative statements by assuming all positive statements are automatically true.
  - Why it fails: Positive statements are defined by being testable, not by being correct.
  - Correct: Classify statements by whether they can be tested with data, not whether you agree with the claim.
- **Wrong:** Only counting explicit monetary costs when calculating opportunity cost.
  - Why it fails: Opportunity cost includes the value of all implicit forgone alternatives, not just out-of-pocket expenses.
  - Correct: Always account for the next best alternative you gave up, even if it has no explicit price tag.

## Cheatsheet

| Key Concept | Core Definition |
| --- | --- |
| Scarcity | Condition where unlimited human wants exceed the limited resources available to satisfy them |
| Opportunity Cost | The value of the next best alternative foregone when making an economic choice |
| Ceteris Paribus | Core economic assumption meaning 'all other variables remain equal' |
| Positive Economics | Objective, testable analysis of how the economy actually works |
| Normative Economics | Subjective, value-based analysis of what economic outcomes or policy should be |

## What's next

Start this unit by learning the core definition of economics and the foundational concept of scarcity in the first sub-topic below. Once you complete both sub-topics in this unit, you will be ready to move on to the next unit covering competitive markets, demand, and supply.

- [What is economics](https://www.owlsprep.com/study/ib-economics-sl-u1-what-is-economics/)
- [Demand in competitive markets](https://www.owlsprep.com/study/ib-economics-sl-u2-demand/)
- [How economists approach the world](https://www.owlsprep.com/study/ib-economics-sl-u1-how-economists-approach-the-world/)

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