INTRODUCTION TO ECONOMICS

Hey Guyz, This is our First Official Economics Post for 2015, So we are Excited!!!. We are going back to the Beginning, to the Basics to truly understand what Economics is all about.

MEANING AND BASIC CONCEPTS.

Economics in my own understanding is a social science that studies human beings and their behavior. Most especially, their behavior in relation to production, distribution of wealth and business. It is also concerned with the analysis and explanation and not mere descriptions, of why standards of living in different countries vary

Some famous definitions of Economics include-

Alfred Marshal who defined economics as “A Study of Mankind in the ordinary business of life.”

Adam Smith defined economics as “An Inquiry into the nature and causes of wealth of nations.”

John Stuart Mill defined economics as “The Practical science of Production and Distribution of Wealth.”

H.J. Davenport defined economics as “The science that treats phenomena from the

stand point of price.”

However, the most generally accepted definition of economics is the one put forward by Prof Lionel C. Robbins. He defined Economics as “The Science which studies human behavior as a relationship between ends and scarce means which have alternative uses.

This definition is more acceptable because it covers Scarcity, wants, human behavior and choice. The ends here mean human wants, desires and needs which are numerous.

Scarce means are the limited available resources used in satisfying the numerous human wants. This all put together is that the means to satisfy our human wants are limited.

Alternative uses stands for the scarce resources that can be used for different purposes.

NATURE & SCOPE OF ECONOMICS.

Economics belongs to a group of subjects called the SOCIAL SCIENCES. Other of such subjects is Government, Political Science, Philosophy, Anthropology, Religious Studies, Psychology, Geography, Sociology etc. All these subjects deal with various aspects of human behavior.

Even though Economics is often regarded as a science subject, it does not assume the same level of precision and accuracy as any of the natural/ pure/ physical sciences like chemistry, physics and biology. This is because economics deals with human behavior, which is very complex and changes from time to time depending on circumstances.

BASIC CONCEPTS OF ECONOMICS.

1. WANTS- are an insatiable desire/ need by human beings to own goods/ services that give satisfaction. The basic needs of man include- Food, Clothing, and Shelter. They are unlimited in number and nature.

2. SCARCITY- is defined as the limited supply of resources which are used for the satisfaction of unlimited wants. In other words, they are the inability of human beings to provide themselves with all the things they desire/want.

3. SCALE OF PREFERENCE-is defined as a list of unlimited wants arranged in the order of their relative importance. That is, in the order in which they matter to you. For instance, a book might be more important to you to buy now than even a car. Your list of priorities in the order of importance.

4. OPPORTUNITY COST- It is the same as Alternative Forgone. That is, what you give up in order to gain something else, on your Scale of Preference what you delay in order to do another. When you prefer to buy a Beats by Dr Dre Headset over a pair of Nike Sneakers, the Sneakers are the alternative forgone/opportunity cost.

IMPORTANCE OF SCALE OF PREFERENCE:

a. Ranking of Needs- Scale of Preference helps to put our needs in their right order. Order of Priority.

b. Financial Prudence- It helps to make you more financially managed and accountable.

c. Identification of Highest Priority- It helps you pick out with ease your highest priority.

WHY WE STUDY ECONOMICS:

1. To equip students with the basic skills for analyzing economic problems in order to take better economic decisions.

2. It helps the Government of a Country to promote growth and development and also improve the standard of living of the citizens.

3. It helps the Citizens to better understand the Economic decisions that are taken by the Government of a Country.

BASIC ECONOMIC PROBLEMS

1. WHAT TO PRODUCE- This is a Fundamental Question for every industry needs to answer, Are we going to be a Goods/ Service Provider? If Goods What Good do we Specialise In? If services What service do we specialise in? Questions like this are a must to be answered before any economic activity can take place.

2. HOW TO PRODUCE- This is another fundamental question to ask. Are we Labour/Capital Intensive? Is this a Small-Scale/Large-Scale Production Company? These must receive answers before an industry is born.

3. FOR WHOM TO PRODUCE- This talks about your Target Market. Is it Women/Men/Youths/Elderly/Children/Adolescents. This talks about having a focus and purpose. Should it be for the Rich/Super-Rich/Wealthy/Average/Poor etc.

These are fundamental questions that must be answered before a Company or Industry can be set up.

Hope this was very helpful to you, leave a comment of what you think of this tutorial and your questions below. Have a Blessed Day and Remember You are Amazing. God Bless.