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Re: SYLLABUS Cambridge O Level Economics 2281 June and November 2015

5.1 Syllabus aims
The aims below describe the educational purposes of a course in economics for the Cambridge O Level
exam.
The aims are to:
1 develop candidates’ knowledge and understanding of economic terminology, principles and theories
2 develop candidates’ basic economic numeracy and literacy and their ability to handle simple data
including graphs and diagrams
3 develop candidates’ ability to use the tools of economic analysis in particular situations
4 show candidates how to identify and discriminate between differing sources of information and how to
distinguish between facts and value judgements in economic issues
5 develop candidates’ ability to use economic skills (with reference to individuals, groups and
organisations) to understand better the world in which they live
6 develop candidates’ understanding of the economies of developed and developing nations and of
the relationships between them; and to develop their appreciation of these relationships from the
perspective of both developed and developing nations.
5.2 Assessment objectives and their weightings
The three assessment objectives in Cambridge O Level Economics are:
AO1: Knowledge with understanding
AO2: Analysis
AO3: Critical evaluation and decision-making.
AO1: Knowledge with understanding
Candidates should be able to:
• show knowledge and understanding of economic facts, definitions, concepts, principles and theories
• use economic vocabulary and terminology.
AO2: Analysis
Candidates should be able to:
• select, organise and interpret data
• apply economic knowledge and understanding in written, numerical, diagrammatic and graphical form
• use economic data, to recognise patterns in such data, and to deduce relationships.

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Re: SYLLABUS Cambridge O Level Economics 2281 June and November 2015

11 Cambridge O Level Economics 2281. Syllabus for examination in 2015.
6.1 Basic economic problem: choice and the allocation of resources
Candidates should be able to:
• define the nature of the economic problem (finite resources and unlimited wants)
• define the factors of production (land, labour, capital, enterprise)
• define opportunity cost and analyse particular circumstances to illustrate the concept
• demonstrate how production possibility curves can be used to illustrate choice and resource allocation
• evaluate the implications of particular courses of action in terms of opportunity cost.
6.2 The allocation of resources: how the market works; market
failure
Candidates should be able to:
• describe the allocation of resources in market and mixed economic systems
• demonstrate the principle of equilibrium price and analyse simple market situations with changes in
demand and supply
• describe the causes of changes in demand and supply conditions and analyse such changes to show
effects in the market
• define price elasticity of demand and supply and perform simple calculations
• demonstrate the usefulness of price elasticity in particular situations such as revenue changes,
consumer expenditure
• evaluate the merits of the market system
• describe the concept of market failure and explain the reasons for its occurrence
• define private and social costs1 and benefits and discuss conflicts of interest in relation to these costs
and benefits in the short-term and long-term through studies of the following issues:
– conserving resources versus using resources
– public expenditure versus private expenditure.
1 Social costs are equal to the sum of private costs and external costs.
Syllabus content
12 Cambridge O Level Economics 2281. Syllabus for examination in 2015.
6.3 The individual as producer, consumer and borrower
Candidates should be able to:
• describe the functions of money and the need for exchange
• describe the functions of central banks, stock exchanges, commercial banks
• identify the factors affecting an individual’s choice of occupation (wage factors and non-wage factors)
• describe likely changes in earnings over time for an individual
• describe the differences in earnings between different groups of workers (male/female; skilled/unskilled;
private/public; agricultural/manufacturing/services)
• describe trade unions and analyse their role in an economy
• describe the benefits and disadvantages of specialisation for the individual
• analyse the different motives for spending, saving and borrowing
• discuss how and why different income groups have different expenditure patterns (spending, saving and
borrowing).
6.4 The private firm as producer and employer
Candidates should be able to:
• describe the type of business organisation in the public and private sectors: sole proprietors,
partnerships, private limited companies, public limited companies, multinationals, co-operatives, public
corporations
• describe and evaluate the effects of changes in the structure of business organisations
• describe what determines the demand for factors of production
• distinguish between labour-intensive and capital-intensive production
• define productivity and recognise the difference between productivity and production
• define total and average cost, fixed and variable cost and perform simple calculations
• analyse particular situations to show changes in total and average cost as output changes
• define total and average revenue and perform simple calculations
• describe the principle of profit maximisation as a goal and recognise that business organisations may
have different goals
• describe the characteristics of perfect competition and monopoly
• describe pricing and output policies in perfect competition and monopoly
• describe the main reasons for the different sizes of firms (size of market, capital, organisation)
• describe and evaluate integration, economies and diseconomies of scale
• discuss the advantages and disadvantages of monopoly.
Syllabus content
13 Cambridge O Level Economics 2281. Syllabus for examination in 2015.
6.5 Role of government in an economy
Candidates should be able to:
• describe the government as a producer of goods and services and as an employer
• describe the aims of government policies, such as full employment, price stability, economic growth,
redistribution of income, balance of payments stability
• explain fiscal, monetary and supply-side policies
• analyse the use of fiscal, monetary and supply-side policies
• discuss the possible conflicts between government aims
• describe the types of taxation (direct, indirect, progressive, regressive, proportional) and the impact of
taxation
• discuss the government’s influence (regulation, subsidies, taxes) on private producers.
6.6 Economic indicators
With regards to prices, candidates should be able to:
• describe how a consumer prices index/retail prices index is calculated
• discuss the causes and consequences of inflation
• discuss the causes and consequences of deflation.
With regards to employment, candidates should be able to:
• describe the changing patterns and levels of employment
• discuss the causes and consequences of unemployment.
With regards to output, candidates should be able to:
• define Gross Domestic Product (GDP)
• describe and have a general understanding of the causes and consequences of economic growth
• define the term recession
• describe and evaluate measures and indicators of comparative living standards, such as GDP per head,
Human Development Index (HDI).
Syllabus content
6.7 Developed and developing economies: trends in production,
population and living standards
Candidates should be able to:
• describe why some countries are classified as developed and others are not
• describe the difference between absolute and relative poverty
• recognise and discuss policies to alleviate poverty
• describe the factors that affect population growth (birth rate, death rate, fertility rate, net migration) and
discuss reasons for the different rates of growth in different countries
• analyse the problems and consequences of these population changes for countries at different stages of
development
• describe the effects of changing size and structure of population on an economy
• discuss differences in standards of living within countries and between countries, both developed and
developing.
6.8 International aspects
Candidates should be able to:
• describe the benefits and disadvantages of specialisation at regional and national levels
• describe the structure of the current account of the balance of payments
• discuss the causes and consequences of current account deficits and surpluses
• define exchange rates
• discuss the causes and consequences of exchange rate fluctuations
• describe methods of trade protection
• discuss the merits of free trade and protection.

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