ECONOMICS LESSON ONE:
SS1
FIRST TERM WEEK
1
NATURE
AND SCOPE OF ECONOMICS
Notes
Economics, a controversial subject, has
gathered many opinions over the years from great scholars, economists, philosophers
and kings, attempting to define and explain its wide concepts.
Some notable definitions are:
1. Sir. Alfred Marshall
2. Sir. Adam Smith
3. Sir. J.
S. Mill
4. Sir. T. Scitovsky
5. Sir.
H. J. Davenport
6. Prof. Lionel Robinson Robins ’ definition became the basis for modern
economic concepts.
BASIC
ECONOMIC CONCEPTS
1.
WANTS: Prof. Robinson
2.
RESOURCES: Resources are the basic inputs needed
to create goods and services to satisfy man’s wants. These resources are
limited in supply. Ex. Land, labor,
capital, management.
3.
SCARCITY: The limited nature of resources is
referred to as scarcity. Human wants are unlimited while resources needed to
satisfy them are limited, to obtain maximum satisfaction from the available
resources, man has to make choice as he undertake his economic activities.
4.
CHOICE: This has to do with making economic
decision on how to spend the available scarce resources to obtain maximum
satisfaction.
5.
SCALE OF PREFERENCE: In order to make sound
economic decision, wants are arranged in order of their relative importance
beginning from the most pressing need to the least. The wants on top are
satisfied first, given the available resources, the unsatisfied wants are
called Opportunity Cost.
6.
OPPORTUNITY COST : This is the forgone alternative in a list of
wants, in other to satisfy the most pressing need. They are the sacrifice of
every economic decision.
ECONOMIC AGENTS
These are the decision making-body in every economic system.
1.
Individual/household: Makes economic decision
for self and family.
2.
Firms: makes decision for corporate organizations
and business establishments, on cost-effective techniques of production etc.
3.
Government: Makes economic decision for the state.
BRANCHES OF ECONOMICS
1.
MICRO-ECONOMICS: Deals with smaller economic
components and treats them in units. Ex.
·
Price Determination
·
Production
·
Cost and out
·
Allocation of resources
2.
MACRO-ECONOMICS: Deals with the large components
of an economic system and treats the economy as a whole. Ex.
·
Employment
·
National Income
·
Savings and investments
·
General Price
level.
IMPORTANCE OF ECONOMICS
1.
For effective and efficient allocation of
resources.
2.
Provides better understanding of the society.
3.
Explains the workings of the society.
4.
To make rational economic decisions, thereby
avoiding wastage.
5.
To solve basic economic problems of the society.
COMPULSORY TEST 1 THEORY: 10MARKS
1.
Economic problems arise because a country’s resources are
limited in relation to her unlimited wants. Identify and explain these economic
problems.
(1989Q3)
2.
Distinguish briefly but clearly
between opportunity cost and money cost.
(1990 Q3)
3. Explain
the term opportunity cost. (b) Highlight the relevance of the opportunity cost
concept to individuals, firms and government
(1997
Q3)
4. Why is scale of preference important? (b) Explain
the concept "opportunity cost" (c) state the opportunity cost in each
of the following actions: i) A
shirt was purchased for N500.00 instead of a pair of shoes. ii) Onions were planted on a farm realizing N20,000.00 instead of
maize that could have realize n25,000.00
(2003
Q3)
5. (a)
Why is scarcity a fundamental problem in economics? (b) Give a reason why Economics is a (i) science (ii) social science
(c) How does government solve the problem of scarcity?
(2009 Q3)
OBJECTIVES: 50MARKS
. Economics is a science which studies human
behavior as a relationship between ends and scarce means which have alternative
uses. 'Ends' here refers to A.
Resources. B. Wants .C. Choice. D. Output. E. Factors
2.
Scarcity in Economics means that resources A. are not enough to share among the
producers of goods and services. B. Needed to satisfy wants are limited. C. Are never enough to share among consumers
of goods and services D. Required to meet our essential wants are unlimited. E. Can be managed if
those who use them behave rationally
3.
Economics can be best defined as the study of A. How to spend family income
efficiently B. How to find minimum cost
of production. C. The
interpretation of scarce resources and dates. D. How scarce resources can be
used efficiently. E. Why resources are scarce. 4.
Choice is necessary because resources A. Are available. B. Can be found
everywhere. C. Are constant. D. Are scarce. E. Are unlimited. 5. Economics is a social science because it-
A. Deals with an aspects of human behavior. B. Provides people with the
commodity they want. C. Deals
with limited resources which have alternative uses. D. Deals with the
production of goods for present and future consumption. E. Is related to
how choice is made.
6.
Scarcity in Economics generally refers to A. A period of production. B.
Hoarding of goods. C. Monopolization of existing supply of resources. D. Period of famine. E. Resources
being limited.
7. Opportunity cost is defined as the A. Money cost. B. Cost
of Production C. Real cost. D. Variable
cost. E. Fixed cost.
8.
The most basic concern of economist is to A. Create human wants. B. Satisfy all
human wants. C. Redistribute income so that it is used correctly. D. Create perfect competition. E. Allocate
scarce resources to satisfy human wants.
9.
Which of the following defines economics most comprehensively? A. The study of
buying and selling. B. Organization of industries and markets. C. The study of man's behavior in allocation of
scarce resources. D. National development, planning and budgeting. E. The study of market forces as they
affect human behavior.
10.
Economics is the study of how to A. Choose between alternatives given limited
resources. B. Regulate the money that is in circulation in a country. C. Be prudent in the use
of available resources. D. Improve the standard of living of the society at
large. E. Arrange our needs
in order of usefulness before satisfying them
11.
Scarcity in Economics arises because. A. The resources available are adequate.
B. Individuals have limited time. C. Resources are limited in supply. D. Human beings have
limited wants. E. Individuals wants are equal to the resources available
12.
The real cost of a commodity is. A. The coat of the alternative that has to be
sacrificed for it. B. The alternative that has to be forgone in order to purchase it. C. Its market
price. D. The alternative coat involved when the opportunity of buying the
product is missed. E. The sacrifice
that is made after buying the commodity.
13.
The definition of Economics as 'the science that studies human behavior as a
relationship between ends and scarce means which have alternative uses' was given by. A. Adam Smith David Ricardo Lionel Robins Thomas R. Malthus Robert Giffen
14.
The concept of economic efficiency primarily implies. A. Obtaining maximum
output from available resources at the lowest possible cost. B.
Conserving our petroleum resources. C. Equity in the distribution of the nation’s
wealth. D. Producing without waste. E. The limited wants unlimited resources dilemma.
15.
Economics is a social science which studies how A. To redistribute income. B.
Human beings have behave. C. The market price is fixed. D. Scarce resources are allocated to satisfy human
wants. E. Wasteful spending is eliminated.
16.
Scarcity in Economics means. A. Shortage of a commodity. B. Unlimited demand
for consumer goods. C. Limited supply of goods and services. D. Total absence of goods in the market. E. High
cost of a commodity.
17.
The decision on what to produce is a problem in A. All economic systems. B. A
mixed economic systems only. C. A Democratic socialist economy only. D. A free enterprise system only. E. A planned
economic systems only.
18.
The basic problem that Economics attempt to solve is the. A. Ranking of goods
and services. B. Pricing of goods and services. C. Scarcity of resources. D. Foregoing of
alternatives E. Satisfaction of producers needs.
19.
The ranking of a consumers needs in order of importance is termed.. A. An
opportunity coat. B. Economies of scale. C. A scale of preference. D. The making of choice. E. Direct
production.
20.
Economics is often described as a science because it A. Adopts the use of
laboratory experiments. B. Involves accurate prediction of human beings. C. Makes use of
controlled experiments. D. Uses scientific methods to explain observed
phenomena. E. Deals with observation
and field work.
21.
Scarcity in Economics means that. A. The
economy can scarcely produce anything.
B. Human wants are limitless. C. The economy has very view resources. D. Human wants are limited
relative to resources. E. Resources are limited relative to wants.
22.
The study of Economics enables the individual to...A. Be miserly in the
spending of his money. B. Derive maximum satisfaction from the money he spends. C. Determine the
right market to visit. D. Avoid the purchase of luxurious items. E. Derive
solutions to all problems.
23.
One way of solving the problems of scarcity that's faces individuals is for ..
A. The government to import goods massively so the citizens can get all they want. B. Them to
work very hard so that they are able to buy all their wants. C. Them to choose
between alternatives since they
cannot meet all their wants. D. The government to study people's behavior in
order to know their wants. E. Them to use their
resources as they want.
24.
Every Society strives to pursue all the following economic objectives except...
A. Increased production. B. Price stability. C. An inequitable distribution of income. D.
Sustainable growth and development.
25.
Scarcity implies that A. Goods cannot be produced efficiently. B. Human wants
are unlimited. C. Goods and services are limited in supply. D. Commodities are evenly
distributed within the economy.
26.
Economics is best described as the study of A. The wealth of nations. B. How
man consumes his product. C. How man provides for his everyday needs. D. The distribution of wealth.
27.
Economists speak about opportunity cost when a consumer... A. Has the chance to
minimize cost. B. Has to forgo one thing in order to have another. C. Can equate his fixed cost with his variable
cost. D. Is able to save part of his income.
28.
Economics as a field of study is a ... A. Pure science. B. Political science.
C. Social science. D. Physical science.
29.
The three major agents of an economic system are the... A. Consumers, Workers
and Producers. B. Markets, telecommunications and banks. C. Schools, hospitals and universities. D.
Individuals, firms and government.
30.
The problem of scarcity is reduced by... A. Controlling consumption of goods an
services. B. Producing everything needed by consumers. C. Ensuring efficient allocation of resources. D.
Restricting consumer choices and tastes.
31.
Which of the following is an Economic activity? A. Attending a town's meeting.
B. A visit to the stadium. C. Payment of school fees D. Arresting a petty thief.
32. The concept of opportunity
coat is important to the firm because A. It determine the price o the firm's
products. B. Increase the level of
the
out of the firm. C. Leads to maximum satisfaction of the consumer D. Guides
firms in allocating scarce product.
33. Economic activities are undertaken to solve the problem of........
A. consumption B. opportunity cost C. production D. scarcity
34. A list of consumers' want arranged in order
of priority is known as...A. a budget B. an opportunity cost C. a scale of preference D.
choice
35. The study of Economics enables individuals
to...... A. change scarce resources B.
evade taxes C. accumulate huge
wealth. D.
make rational
decisions
36. Most of the problems of
economies arise as a result of.....
A. competing demands for scarce
resources. B. Increase in demand for
goods and
services. C. The desire of producers to supply more goods and services. D. The
need to reduce the level of poverty.
37. The three
principal economic units in any system are... B. Trade, industry and banking.
C. Workers, consumers and shareholders. C.
Households, firms
and government.
38. The main
concern of economists is to... A. Allocate scarce resources to satisfy human
wants. B. Satisfy all human wants. C. Redistribute
income between the rich and the poor. D.
Control the growth of population.
39. Productive resources are also called... A.
Principle of production. B. Factors of production. C. Items of production. D.
Labour and
material resources.
40. The study of
Economics becomes necessary because of the ... A. Large population size of the
world. B. Scarcity of resources. C
opportunity cost of goods and services.
D. Need to satisfy every desire of man.
41. The concept
of opportunity cost is also referred to as ..A. Social cost. B. Real cost. C.
Fixed cost. D variable cost
42. Choice is
necessitated by A. Demand and supply. B. Cost of production. C. Production
possibility curve. D. Scarcity of resources.
43. Human wants
are... A. Limited. B. Scarce. C. Unlimited. D. In grades.
44. The
difference between the money cost and real cost of any item is that... A. Real
cost is the alternative forgone while money cost is the
actual amount paid for buying the item.
B. The real cost is the opportunity cost while the money is the marginal cost.
C. Money cost is the opportunity cost
while real cost is the actual cost in monetary terms. D. Money cost is always
greater than real cost.
45. The action of
government to forgo road construction in order to provide more health
facilities denotes... A. Sound economic decision. B. Opportunity cost. C.
Practicable government policy. D. Scale of preference.
46. Human wants
are unlimited because A. Production is inadequate. B. Resources have
alternative uses. C. New wants always arise. D. Resources are limited.
47. Households
make economic decisions because they want to... A. Make more profits. B.
Increase their salaries and wages. C. Increase their
purchase. D. Maximize their satisfaction.
48. Economics is
regarded as a science because it A. Studies laws that govern human behavior. B.
Uses scientific methods to explain human behavior.
C. Makes use of controlled experiments to explain human behavior. D. Makes use
of machines to study human behavior.
49. Human wants
are insatiable because wants are... A. Limited while means are scarce. B.
Unlimited and means are also unlimited. C. Limited
and means are also limited. D. Unlimited while means are scarce.
50. Scale of
Preference is important for the following reasons except in A. Satisfying
wants. B. Making rational choices. C. Making optimum allocation of resources. D. Using scarce resources efficiently.
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