We introduce you to economics. We introduce you to important concepts of scarcity, choice and opportunity cost. We explain these concepts with the aid of a production possibilities curve. Next we use production possibilities curves to illustrate different situations. We explain why economics is a s...
choice and opportunity cost production possibilities curve goods and services consumer goods and capital goods different categories of consumer goods why economics is a social science
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ECS1601 Questions & Answers Exam Pack For Year 2022
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WHAT IS ECONOMICS
ALL ABOU
Chapte
, What is economics?
o Economics is derived form the Greek word oikos meaning house and némein meaning manage. Economics is
of household management and is concerned with the ordinary business of life it is regarded as the study of h
beings or societies (governments, businesses, households, and individuals) allocate and utilize scarce resourc
o Basic fact of economic life scarcity without scarcity it would not be necessary to make choices
o Wants are plentiful but the means are scarce therefore we need to make choices
o Relationship between unlimited wants and scarce resources is central to economics
o Lionel Robbins (1898-1984) a prominent 20th century British economist set the tone for most modern definiti
1930s by defining economics as “the science which studies human behaviour as a relationship between ends
means which have alternative uses”
o Central elements of economics are scarcity and choice
o Economics also seeks to describe explain, analyse and predict a variety of phenomena such as economic grow
unemployment, inflation, trade between individuals and countries, the prices of different goods and services
wealth, money, interest rates, exchange rates and business cycles
Scarcity, choice and opportunity cost
o Economics is concerned with scarcity there is not enough goods and services to satisfy everyone's wants, wan
unlimited but the means which wants can satisfied are limited
Wants – are human desires for goods and services. Our wants are unlimited we all want everything. As individua
society we always want or desire more or better goods and services. Individuals have biological, spiritual, materi
and social wants while people as a group have collective wants for things such as law and order, justice and socia
Needs – are necessities the things that are essential for survival, such as food, water, shelter and clothing. Needs
wants are not unlimited.
Demand – differ from wants, desires or needs. There is a demand for a good or service only if those who want to
have the means to do it. Demand has to be backed by purchasing power.
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