ECONOMICS S S S 1 BASIC CONCEPTS IN ECONOMICS The Basic concepts in economics are: Wants, Scarcity, scale of preference, choice and opportunity cost

Basic concept (cont’d) Wants: These are human desires in form of goods and services. Thus, wants refer to the desire or wish to own goods or services that give satisfaction. The basic needs (as the case may be ) of man include; food, shelter and clothing. As these are satisfied, others will arise. This is why we say that human wants are unlimited(numerous) and insatiable. Thus concluding that human wants are unlimited while the resources used in satisfying them are limited Scarcity: This refers to the limited available resources used in satisfying the unlimited human wants. These resources which are in the form of human, natural, materials are scarce relative to their demand. It is as result of scarcity of resources that made the study of Economics very essential in order to find alternative best uses of these scarce resources. Choice: Choice involves decision making. That is, the act of choosing or selecting one out of a number of alternatives for maximum satisfaction. Choice arises as a result of numerous wants and the scarcity of resources used in satisfying them. Choice therefore arises as a result of scarcity.

Basic concepts cont’d Scale of preference: This is a table or a list of individual’s wants arranged in order of their relative importance. Since human wants are unlimited human beings have no choice than to rank these wants in order of their relative importance called scale of preference, placing more important or pressing needs first before the less important ones that may be satisfied at a latter day. Opportunity cost: This means the alternative forgone or sacrifice made in order to satisfy another want. It refers to the need that is left unsatisfied in order to satisfy another more pressing need. For instance; in the student’s scale of preference ;the cost of book, biro, and sandals bought are the shirt, and shoes he had left un bought. Note: (a) money cost: This is the amount of money spent on a choice made. Eg if it costs #1000 to buy a bag, the money cost is #1000 spent (b) Real Cost: this is the alternative forgone or sacrifice made for satisfaction. This is also called opportunity cost explained earlier

Basic tools For Economic Analysis Economics as a subject uses different tools for economic analysis of figures, names, dates and quantitative information. Some of these basic tools include tables, graphs charts, mean, median etc. Tables: A table is a systematic arrangement of data in rows and columns aimed at presenting large quantity of data in a condensed pattern

Basic tools For Economic Analysis Cont’d TABLE: Eg The scores of Four Students in a F A CA Emeka=ENG 95% MATHS 90% GEN. KNOW 70% OJO= ENG 60% MATHS 80% GEN. KNOW70% EFE= ENG 80% MATHS 90% GEN. KNOW 80 David= ENG 90% MATHS 95% GEN KNOW 70% The above information can be better understood or explained when arranged in a table

A Table showing performance of 4 Students in FA CA ENGLISH MATHS GEN. KNOWLEDGE TOTAL EMEKA 95 90 70 325 OJO 60 80 210 EFE 250 DAVI 255

TABLE CONT,d From the table above, one can see and interpret at glance the performances of the students Features of a table -It must have a title / heading -It must have a title for each column and row -Must be easy to understand -It must have footnote indicating the source of information ASSIGNMENT: Choice arises as a result of scarcity, explain.