BASIC CONCEPTS OF ECONOMICS CONTD.

Hey Guyz, HAPPY WORKERS DAY to the viewers in Nigeria. It’s a day to recognize the workers of all levels in Nigeria and I Pray for more strength and grace to work effectively and productively and most of all joyfully.

It’s a new day isn’t it; we are going to continue from where we stopped in Economics 101. Let’s get started.

CHOICE.

Choice can be defined as a system of selecting or choosing one out of a number of alternatives. Choice arises as a result of numerous human wants and the scarcity of the resources used in satisfying these wants. Human Wants are many and can’t all be satisfied.

OPPORTUNITY COST.

Opportunity Cost can be defined as an expression of cost in terms of forgone alternatives. It is the satisfaction of one’s want at the expense of another want. In other words, it refers to the wants we leave unsatisfied, in order to get some more important wants satisfied. The wants we do not attend to are called FORGONE ALTERNATIVES and leaving it unattended to is what we call Opportunity Cost. This is quite different from MONEY COST.

Money Cost is the total amount of money that is spent in order to acquire a set of goods and services. For example, To get a Brand New HP Laptop in Nigeria costs within 70-100 thousand naira, In essence the Money Cost of a brand new Hp Laptop is 70-100 thousand naira.

IMPORTANCE OF OPPORTUNITY COST:

Opportunity Cost is important to Individuals, Firms and Govt.

TO INDIVIDUALS:

a. It enables individuals take/make wise decisions on how to spend in satisfying their numerous wants.

b. It also assists individuals make maximum use of their scarce resources relative to their unlimited wants.

TO FIRMS:

a. It assists firms take rational decisions about production processes.

b. It also helps manufacturing industries in deciding the techniques of production. Whether to adopt Capital/ Labour intensive methods of production.

TO GOVERNMENTS:

a. It helps governments in the preparation of budgets, since it assists in efficient allocation of scarce resources to certain sectors of the economy.

b. It helps the govt in making certain decisions on for example, the priority areas that need more attention and more finance.

WHY WE STUDY ECONOMICS:

1. ALLOCATION OF RESOURCES- The study of economics enables the government to allocate scarce resources to various sectors of the economy.

2. PREPARATION OF BUDGET- Economics assists the government to determine the expected income and expenditure of a country.

3. SATISFACTION OF WANTS- It helps us to utilize the principles of choice, opportunity cost, scale of preference, etc, in order to satisfy human wants.

4. PROVISION OF BASIC TOOLS- It provides basic tools for analyzing economic problems among individuals, firms and governments.

5. PRODUCTION- It assists us to determine what to produce, when to produce, factors of production and how to produce goods and services required to satisfy human wants.

6. MAXIMISATION OF PROFITS- Economics enables traders and businessmen to maximize their profits using economic principles in their businesses.

7. DEVELOPMENT OF PROGRAMMES- It also enables the government to develop certain programmes that are beneficial to the people.

8. SOLUTION TO ECONOMIC PROBLEMS- It enables individuals, firms and governments to solve their problems, using various principles of the subject Economics.

9. CONSUMPTION OF COMMODITIES- It also assists us to determine the pattern of consumption of goods and services in our local environment.

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This concludes our session for today. Hope you had fun while learning today? For your questions, send me a msg- dividiamond@gmail.com and pls leave your comments of what you think about the session today. Until we meet again remain ever blessed and remember you are for SIGNS & WONDERS. God Bless you.