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

Prerequisites

There are no prerequisites for this course.

Course Description

Economics is a dynamic and constantly evolving field of social science, which looks at 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 role of the government in the economy. Students are introduced to and explore fundamental economic concepts. They examine basic economic models where consumers and businesses engage in mutually beneficial transactions, and investigate the motivations behind both consumer and business behaviour. They examine how individuals might respond to incentives. Students are encouraged to investigate contemporary examples and case studies to enhance their understanding of the introductory economics concepts.

Students use demand and supply models to explain changes in prices and quantities traded. Through close examination of one or more 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.

Students consider the insights of behavioural economics and how those insights contrast with the traditional model of consumer behaviour. They investigate at least one behavioural economics experiment, and analyse how the theories and observations of behavioural economics have been used by government in planning and implementing policy, and by businesses in managing their relationships with consumers.

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, investigate some of the factors that motivate people to act in the way they do and consider the consequences of their actions. Every country is faced with the same basic economic problem: how are resources to be allocated to best 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. Students consider the roles of three key economic agents in the Australian economy: consumers, businesses and the government. 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 economists have developed to help them undertake and analyse economic decision-making.

Decision making in markets

The Australian economy predominantly uses the market-based system to allocate resources. Markets are where goods and services are exchanged for a price. Producers/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 ‘market mechanism’ – the basic demand and supply model. Students develop skills in making predictions about the possible consequences of changes in markets. They analyse the degree of competition in markets and the effect on prices, resource allocation and living standards. Using contemporary case studies, students make connections between economic theory and the workings of different markets in the Australian and global economies. In studying the operation of markets and using relevant models, students consider one or more of the markets listed:

agricultural markets such as wool, wheat, milk and beef
other commodity markets such as minerals and energy
community markets
utilities markets such as gas, electricity, water and telecommunications
carbon emissions / carbon trading markets
finance markets
cryptocurrency markets
international education market
tourism markets
share markets
foreign exchange markets
labour markets
property/housing markets
online markets
health markets
any other market

Behavioural economics

Economics is affected significantly by human behaviour. By studying behavioural economics students therefore gain an insight into the ideas and experiments of behavioural economists. They will develop an understanding of how the insights of behavioural economics complement the traditional economic understanding of the behaviour of economic agents. Students will also investigate how the observations of behavioural economists have been used to inform policy planning and implementation by government and producers/business.

Assessment

Outcomes	Assessment Tasks
Outcomes	(school-assessed coursework)
On completion of this unit the student should be able to describe the basic economic problem, discuss the role of consumers, businesses and the government in the economy, and analyse the factors that affect economic decision-making.	Tests, 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 and analyse the extent of competition in markets.	Tests, problem-solving tasks or essay or folio or presentation.
On completion of this unit the student should be able to explain how behavioural economics complements traditional understandings of decision-making, and analyse the effects of behavioural economics insights on consumers and other economic agents.	Tests, problem-solving tasks or essay or folio or presentation.

Overall Final Assessment

End of Semester Examination – 1.5 hours.