Basic Concept of Economics

Welcome to class! 

In today’s class, we will be talking about the basic Concept Of Economics. Enjoy the class!

Basic Concept of Economics

Basic concepts of Economics classnotes.ng

At the end of the lesson, you should be able to;

  • Explain the term basic concepts of Economics;
  • Differentiate the basic economic concepts of Economics
  • Relate these concepts to individual/government activities

Note

Concept of human wants

Wants refer to numerous goods and services which are desired for consumption.

In economics, wants are what we are interested in having but without money or willingness to pay with money to have it at that point in time.

They could be in the form of tangible goods or services. Tangible goods include goods, houses, television etc; or services such as a driver, cobbler, actor, legal or medical services.

Human wants are insatiable because the means of satisfying them are limited. i.e. scarce. Wants are also called ends, desires, aims or objectives.

Scarcity

In economics, Scarcity is defined as “Limited in Supply” that is to say, all things being scarce or limited in supply is in relation to the demand for them.

This means that before we say something is scarce, we must have compared the available quantity with the present level of demand for it based on the available resources.

Goods and services for sale may be plenty but these in the economic sense are still scarce as long as people do not have enough money to satisfy all their wants.

So, Scarcity does not mean a shortage of resources. Therefore, things can still be regarded as scarce even when it is readily available.

The issue of scarcity is central and fundamental to the study of economics that it may be said that without scarcity there will be no need for the study of economics.

Evaluation

  1. Write a short note on human wants.
  2. Explain scarcity in economics.
Choice

Since human wants are unlimited and resources available to satisfy them are limited, hence choice has to be made. Choice is, therefore, the selection among different alternatives.

The decision to have one thing instead of the other implies choice. Such economic decisions are made by individuals, firms and the government. So every economic decision is a choice. The three aspects of choice are:

  1. Deciding the resources be produced and utilized;
  2. Deciding how to get the resources;
  3. Deciding when to use the resources.
Scale of preference

This is the list of consumer’s want in order of their importance. It has to do with the ranking of a person’s want in order of their importance. The want at the top is supposed to be satisfied before other wants.

Importance of scale of preference
  1. It is a tool for arranging human want.
  2. It helps in making choices
  3. It ensures the optimum allocation of resources.
  4. It shows human want at a glance.
  5. It helps consumers to utilize their resources

Reading assignment

Amplified and Simplified Economics for sss by Femi Longe page 5-7.

General evaluation
  1. Define Economic goods.
  2. Give two examples of Economic goods.
  3. Differentiate between Economic goods and non-economic goods.
  4. Has the concept of opportunity cost any relevance to the West Africa countries?
  5. Distinguish between opportunity cost and money cost.
  6. What is scarcity in economics?
  7. Define opportunity cost.
  8. State the opportunity cost in each of the following actions;
  • A shirt purchased for 1000 instead of a pair of shoes;
  • Oranges planted on a farm realizing N50, 000 instead of mango that could have realized N60, 000

 

In our next class, we will be talking about Opportunity cost.  We hope you enjoyed the class.

Should you have any further question, feel free to ask in the comment section below and trust us to respond as soon as possible.

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