| Scarcity, Choice, and Economic Growth | |
| In his second J1 H2 Economics tuition class, Mr Koh led a discussion on the concepts of scarcity, choice, and opportunity cost, using the PPC model as a framework. He emphasized that while scarcity cannot be eliminated, it can be alleviated. He also introduced the concept of economic growth, distinguishing between actual and potential growth. Actual growth is tied to spending, while potential growth is tied to the quality and quantity of factors of production. Mr Koh concluded by explaining that sustained growth is the combination of actual and potential growth. | |
| Understanding and Applying the DSA Method | |
| Mr Koh discussed the importance of understanding and applying concepts to bridge the gap between notes and test questions. He introduced the DSA (Definition, Shift, and Application) method to answer questions about the impact of an event on the economy using the PPF (Production Possibility Frontier). Mr Koh emphasized that the DSA method is effective and flexible, but examiners often set traps to differentiate between students who memorize and those who truly understand the application. He also highlighted the importance of identifying and avoiding these traps. Mr Koh concluded the session by discussing two key points to note when applying the DSA method. DSA is an example of TET’s Economics tuition framework to help students strengthen their ability to answer examination questions. | |
| Economic Scenarios and Production Possibility | |
| Mr Koh discussed various economic scenarios, including recession, war, natural disasters, and falling birth rates. He explained how these events can lead to a fall in output, income, and spending, and how prolonged recessions can lead to a loss of drive and skills among workers. Mr Koh also introduced the concept of opportunity cost and how it relates to the concave shape of the production possibility curve (PPC). He explained that resources are not homogeneous, which is why the PPC is concave. He concluded by mentioning the law of increasing opportunity cost, which explains the concave shape of the PPC. | |
| Understanding the Law of Increasing Costs | |
| Mr Koh discussed the concept of the Law of Increasing Opportunity Costs, which explains why the Production Possibility Curve (PPC) is concave. He used examples such as farming and office building construction to illustrate how more resources are needed to produce additional units of goods. Mr Koh also emphasized the importance of understanding the opportunity cost in relation to the PPC, using examples like allocating more land for cleaner energy production. He guided the team through the process of defining the PPC, assuming full employment, and considering movements towards a certain axis. Mr Koh also provided examples of how to use the PPC to explain opportunity costs in different scenarios. | |
| Understanding Scarcity, Choice, and PPC | |
| Mr Koh discussed the concept of scarcity and choice in economics, emphasizing the importance of understanding the opportunity cost. He introduced the concept of the Production Possibility Curve (PPC) and its role in illustrating economic growth and efficiency. Mr Koh also introduced the framework for rational decision-making, distinguishing between marginalist and once-off decisions. He used the example of crossing a frozen lake to illustrate the marginalist approach, emphasizing the importance of taking prudent steps to ensure survival. The conversation ended with a preview of the diagram to be used in the next session to further explain the concepts. | |
| Maximizing Satisfaction in Decision-Making | |
| In the same Economics tuition session, Mr Koh discussed the decision-making process from an economist’s perspective. He explained that the objective is to maximize satisfaction, often referred to as maximizing utility or net benefit. Mr Koh clarified that in this context, everyone is self-interested, and the aim is not altruistic. He gave examples of consumers and producers, emphasizing that their primary goal is to maximize their own benefit, whether it be satisfaction or profit. Melvin also mentioned that the concept of consumer surplus will be discussed in more detail later. | |
| Maximizing Social Welfare With Budget Constraints | |
| Mr Koh discussed the concept of maximizing social welfare, focusing on the decision-making process of consumers and the role of the government. He explained that consumers face budgetary constraints and make decisions based on the comparison of costs and benefits. He used the example of buying bubble tea to illustrate this concept, emphasizing that consumers will consume more when the marginal benefit exceeds the marginal cost, and less when the marginal cost exceeds the marginal benefit. Mr Koh also introduced the concept of equilibrium, where the marginal cost and marginal benefit are equal, and net benefit is maximized. An Economics tuition student asked if the marginal cost and marginal benefit could ever go past the axis, which Mr Koh confirmed was possible for marginal benefit but not for marginal cost. | |
| Diminishing Marginal Utility and Costs | |
| Mr Koh discussed the concept of diminishing marginal utility, using the example of consuming bubble tea. He explained that the first unit of bubble tea brings a high level of satisfaction, but subsequent units lead to a decline in satisfaction. He also touched on the law of diminishing marginal utility, which states that the benefit of consuming additional units of a good decreases as more units are consumed. Mr Koh further discussed the concept of negative marginal benefit, where the benefit of consuming additional units becomes negative. He also introduced the concept of the law of increasing costs, which states that the cost of producing additional units of a good increases as more units are produced. Finally, Mr Koh explained how firms make decisions based on marginal costs and marginal revenues, aiming to maximize profits. | |
| Government Decision-Making and Consumer Surplus | |
| Mr Koh discussed the decision-making process of the government, focusing on maximizing social welfare. He differentiated between once-off decisions and incremental ones, using the example of adopting nuclear power in Singapore. Mr Koh emphasized the importance of considering costs, including setup costs and opportunity costs, as well as benefits and constraints. He also highlighted the need to consider unintended consequences. He concluded the class by running through some questions in the Economics Tuition Dropbox folder and assigning a reading assignment. Mr Koh also explained how consumers make decisions, emphasizing that they aim to maximize consumer surplus and are self-interested. | |
| Decision-Making Process and School Answers | |
| Mr Koh discussed the process of decision-making for consumers and producers, emphasizing the importance of understanding the aim, constraints, and comparison of benefits and costs. He used the example of buying a bicycle to illustrate these concepts. Mr Koh also shared various school answers to the same question, highlighting the differences in their approaches. | |
| Understanding Cost and Economic Growth | |
| Mr Koh discussed the importance of understanding the cost of allocating more land for developing cleaner energy resources and the potential impact on Singapore’s economic growth. He emphasized the need to consider factors such as technological advancements, government spending, and public perception when making decisions. Mr Koh also highlighted the importance of citing evidence from the extract in case studies and the need to define the PPC (Production Possibility Curve) in diagrams. He encouraged the team to practice answering questions using the DAMN (Define, Assumption, Movement, Next best alternative foregone) technique and to consider the cost-benefit analysis, constraints, and unintended consequences of decisions. Mr Koh also shared a document with the team for further practice and encouraged them to reach out with any questions. Like the rigour you see in TET’s classes? Reach out to our experienced JC Economics tutor to arrange for a trial class! |