Case study practice: homes or forest?

What this lesson teaches

• I can explain why scarcity forces people, firms and governments to choose how resources are used.

  Syllabus 9570, 1.1.1(b). Scarcity, choice and resource allocation: Scarcity implies that choices have to be made in the allocation of resources between different uses

• I can explain the trade-off and the opportunity cost (the next best thing given up) in a choice.

  Syllabus 9570, 1.1.1(c). Scarcity, choice and resource allocation: When choices are made, trade-offs and opportunity costs are incurred

• I can use a production possibility curve to show scarcity, opportunity cost, efficiency, unemployment and growth.

  Syllabus 9570, 1.1.1(e). Scarcity, choice and resource allocation: Production Possibility Curve (PPC) can be used to illustrate scarcity, choice, opportunity cost, productive efficiency, full employment, unemployment or under-utilisation of economic resources and changes in the productive capacity of an economy

• I can state what consumers, producers and governments each aim to maximise: satisfaction, profit and social welfare.

  Syllabus 9570, 1.1.2(a). Decision-Making Process of Economic Agents: Objectives of rational economic agents: consumers aim to maximise utility (satisfaction), producers aim to maximise profits and governments aim to maximise social welfare

• I can describe how people and firms gather information, weigh costs and benefits, and review choices and their side effects.

  Syllabus 9570, 1.1.2(b). Decision-Making Process of Economic Agents: In the pursuit of their objectives, economic agents gather information, weigh benefits and costs, consider constraints and perspectives before making decisions. They take into account the intended and unintended consequences, and any changes occurring, before reviewing the decisions

Make a guess

A land-scarce city reclaims land from the sea. Does it still have to choose between homes and forest?

1. Yes. Land is still limited compared with all its uses.
2. No. The city can build homes on the new land and keep the forest.
3. No. Reclamation ends the land shortage for good.

The extracts

Extract 1: A small island with many needs

Singapore has about 730 square kilometres of land, and it has grown by roughly a quarter since the 1960s through land reclamation. On this land it must fit homes, offices, factories, schools, hospitals, roads, reservoirs, an airport, military training areas and parks. Planners draw up long-term plans that try to balance these needs for decades ahead, and they revise them regularly as needs change. Written for these notes from public information.

Extract 2: The Dover Forest debate

In 2021, plans to build public housing on part of Dover Forest in western Singapore drew strong public feedback. Nature groups pointed to the many bird species living there and the value of the forest for recreation. Others pointed to the need for new homes near existing towns and transport. The government studied the area further and gathered views. It then decided to keep part of the forest as a nature park and to build homes on the rest. Written for these notes from public information.

Extract 3: Deciding at the margin

Planners in City S face a similar choice. Each extra hectare of forest cleared gives space for about 100 homes. But the first hectares cleared, at the forest edge, are the least valuable for nature, while later ones cut into its heart. Planners say they now use public consultation and nature surveys before deciding, and review plans when new information arrives, such as more people working from home. Critics say consultation slows building down while families wait for homes. Written for these notes; City S is invented.

How the 8- and 10-mark parts are marked

Data parts (1 to 3 marks)

Point-marked. A 'compare' part gives 1 mark for each similarity or difference supported by figures. A 'calculate' part gives marks for the working and the answer; 'explain' adds a mark for what the result shows.

8 marks: L2 (4 to 6)

Benefits and costs are both explained with clear reasoning, including opportunity cost, and tied to evidence from the case. A top L2 answer develops both sides fully.

8 marks: L1 (1 to 3)

One-sided, or points listed without explanation, or little use of the case.

8 marks: E (1 to 2)

E2: a reasoned judgement in the context of the case that says what the answer depends on. E1: a judgement that is stated but not explained.

10 marks: L2 (4 to 7)

Both the benefits and the costs of consultation and review are developed with clear analysis and case evidence. A one-sided answer is usually capped at about 5.

10 marks: L1 (1 to 3)

Mostly descriptive, one-sided, or not tied to the case.

10 marks: E (1 to 3)

E3: a well-reasoned judgement on whether consultation and review lead to better decisions, and when, with a conclusion. E2: a reasoned judgement with less support. E1: an unsupported judgement.

Worked example: Opportunity cost from a PPC

Suppose a PPC shows a town can move from 20 schools and 50 parks to 30 schools and 35 parks.

1. Gain: 30 - 20 = 10 more schools.
2. Given up: 50 - 35 = 15 parks. That is the opportunity cost.
3. Per school: 15 / 10 = 1.5 parks given up for each extra school.
4. On a bowed-out PPC, this cost per school rises the further the town moves.

Watch out for this

Reclaiming land from the sea solves scarcity, so City S no longer has to choose.

Reclamation shifts the PPC outwards, but land is still limited compared with all the uses people want. City S must still choose, and reclamation itself has costs.

Check your understanding

In Figure 1, what is the opportunity cost of moving from A to B?

1. No opportunity cost, because both A and B are on the PPC and so efficient.
2. 35,000 homes, which is how many more homes City S builds.
3. 3,300 hectares of green space, given up for 35,000 more homes.