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.
