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VCE Business Studies

Economics Unit 1: Economics – The Behaviour of Consumers and Businesses


There are no prerequisites for this unit but previous experience in the subject is preferred.

Course Description

Students contemplating a tertiary course in commerce or business should note that courses may require students to undertake some study in economics. Prior experience of economics at secondary school can be an advantage.

Economics is a dynamic and constantly evolving field. As a social science, Economics is interested in the way humans behave and the decisions made to meet the needs and wants of society. In this unit students explore their role in the economy, how they interact with businesses and the way economic models and theories have been developed to explain the causes and effects of human action.

Students explore some fundamental economic concepts. They examine basic economic models where consumers and businesses engage in mutually beneficial transactions and investigate the motivations and consequences of both consumer and business behaviour. They examine how individuals might respond to incentives and how technology may have altered the way businesses and consumers interact. Students are encouraged to investigate contemporary examples and case studies to enhance their understanding of the introductory economic concepts.

Students examine a simple micro-economic model to explain changes in prices and quantities traded. Through close examination of one or more key markets they gain insight into the factors that may affect the way resources are allocated in an economy and how market power can affect efficiency and living standards. 

Areas of Study

Thinking like an economist
Economics has an effect on everyone, irrespective of background. In this area of study students begin to appreciate the contributions of economics as a discipline and investigate some of the factors that motivate people to act in the way they do and the consequences of their actions.

Every country is essentially faced with the same economic problem. How are resources going to be allocated to meet the needs and wants of its people? Students investigate the key economic questions of what and how much to produce, how to produce and who gets to enjoy the benefits of what is produced. They consider the reasons why people might respond differently to incentives and how this can affect living standards. Students are introduced to some of the tools that economists have developed to help them solve economic problems and apply them to contemporary economic issues.

Decision making in markets
The Australian economy uses the market-based system to allocate resources. Markets are essentially places where goods and services are bought and sold. Businesses and consumers engage in mutually beneficial transactions within the market with minimal government intervention.

One of the key tools used to explain how prices change and how resources are allocated is the basic demand and supply model. Using contemporary case-studies students make connections between the theory and the workings of different markets in the Australian and world economy. They develop skills in making predictions and constructing arguments about the possible consequences of key changes in different markets. In studying the operation of markets and using relevant models, students consider one or more of the following markets:

• Agricultural markets such as wool, wheat and beef.
• Other commodity markets such as minerals and energy.
• Community markets.
• The finance market.
• The labour market.
• The property/housing market.
• Online markets.
• The health market.
• Any other relevant market.


Assessment Tasks
(school-assessed coursework)
On completion of this unit the student should be able to describe the basic economic problem, discuss the role of consumers and businesses in the economy and analyse the factors that influence decision making. Problem-solving tasks or essay or folio or presentation.
On completion of this unit the student should be able to explain the role of relative prices and other non-price factors in the allocation of resources in a market-based economy. Problem-solving tasks or essay or folio or presentation.

Overall Final Assessment

End of Semester Examination – 1.5 hours.

Information can be obtained from the Victorian Curriculum and Assessment Authority, Victoria, Australia: