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SS1: ECONOMICS - 1ST TERM

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  1. Introduction to Economics | Week 1
    3 Topics
    |
    1 Quiz
  2. Basic Concept of Economics | Week 2
    4 Topics
    |
    1 Quiz
  3. Basic Tools for Economic Analysis | Week 3
    8 Topics
    |
    1 Quiz
  4. Measure of Central Tendency | Week 4
    4 Topics
    |
    1 Quiz
  5. Theory of Demand & Supply I | Week 5
    5 Topics
    |
    1 Quiz
  6. Theory of Demand & Supply II | Week 6
    7 Topics
    |
    1 Quiz
  7. Theory of Production I | Week 7
    7 Topics
    |
    1 Quiz
  8. Theory of Production II | Week 8
    4 Topics
    |
    1 Quiz
  9. Basic Economic Problems of the Society | Week 9
    1 Topic
    |
    1 Quiz
  10. Economic System | Week 10
    4 Topics
    |
    1 Quiz

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Topic Content:

  • Why We Study Economics

Economics is important and studied for the following reasons:

1. Analyzing Economic Problems: We study economics because it provides solutions to economic problems.

2. Economic growth: It enables the government to plan positively towards growth and development.

3. Allocation of  Resources: It enables us to decide on how to allocate scarce resources. 

4. Goods and Services: Economics deals with the fundamental questions of what to produce, for whom, and how to produce goods and services, in order to satisfy human wants.

5. Estimated Budget: Economics is important because the economic activities of the country will be in a better position to estimate a country‘s total revenue.

6. Distribution: It enables us to know how to distribute goods produced for consumer consumption.

7. Consumption: The study of economics enables us to know the pattern of consumption. 

Evaluation Questions:

1. Economics is a science, discuss.

View Answer

2. Why do we study economics? 

View Answer

3. Explain four basic concepts of economics.

View Answer

4. The table below shows the scale of preference of a student – Mr. Smith whose disposable income is $ 7.00.

Use the information in the table below to answer the questions that follow:

Items NeededPrice ($)
Textbook5.00
Shirt2.00
Shoes3.00
Trousers3.00
Notebook1.00
School fees 7.00
Mattress10.00

(a) (i) What will Mr. Smith spend his money on?

(ii) Explain your answer in 4(a) (i).

(b) (i) What is the opportunity cost of Mr. Smith’s decision in 4(a)(i)?

(ii) Explain your answer in 4(b) (i).

(c) (i) If Mr. Smith’s disposable income increases to $ 10.00, what will he spend it on?

(ii) What is the opportunity cost of the decision in 2(c)(i)?

(d) Define “scale of preference” and “opportunity cost”.

(e) What is the importance of a scale of preference?

View Answer
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Evaluation Question 1

Economics is a science, discuss.

Answer:

Economics is a science because it adopts scientific methods to explain observed phenomena and to predict the outcome of future events. It, therefore, uses both deductive and inductive measures in decision-making. However, the present usage of science refers to the observation of certain facts which are used as a basis for generalization.

Evaluation Question 2

Why do we study economics?

Answer:

  • It helps us to understand people’s behaviour. 
  • It enables us to know people’s wants and how they are satisfied with the little available resources.
  • It enables us to be rational in the use of scarce resources.
  • It affects all aspects of human life.
  • We study economics just to acquire knowledge.
  • We study economics as a profession or as a means of earning our living.
  • It enables us to understand certain aspects of these subjects matter.

Evaluation Question 3

Answer:

Four Basic Concepts of Economics:

  • Want: Want refers to those things we wish or desire to have in life. Human wants are insatiable, they are many and the resources to satisfy them are scarce.

 

  • Scarcity: It refers to the limited supply of resources relative to the demand for them. All economic resources are scarce, which is why it is impossible to satisfy all human wants. For this reason, one is compelled to make a choice.

 

  • Choice: Choice refers to the decision to satisfy a want with a given unit of resources at the expense of another want. Choice means choosing to satisfy one want out of the majority. This problem is created by scarcity.

 

  • Scale of Preference: It is the list of human wants in order of priority or relative importance. It is the ranking of human wants in order of priority.

 

Evaluation Question 4

(a) (i) What will Mr. Smith spend his money on?

Answer: Textbook and shirt

(ii) Explain your answer in 4(a) (i).

Answer: Because the textbook and the shirt are the items at the top of his scale of preference which can be purchased with his $7.00

 

(b) (i) What is the opportunity cost of Mr. Smith’s decision in 4(a)(i)?

Answer: The shoes, the trouser and the notebook

(ii) Explain your answer in 4(b) (i).

Answer: (ii) Because those three items are the next best alternatives, which can be purchased for $7.00

 

(c) (i) If Mr. Smith’s disposable income increases to $ 10.00, what will he spend it on?

Answer: Textbook, shirt and shoes

(ii) What is the opportunity cost of the decision in 2(c)(i)?

Answer: Trouser, the notebook and pay $6.00 out of his school fees.

 

(d) Define “scale of preference” and “opportunity cost”.

Answer: A scale of preference is a list of wants arranged in order of importance. Opportunity cost is the alternative want or commodity forgone

 

(e) What is the importance of a scale of preference?

Answer:

A scale of preference helps an individual, a firm or a government to make rational use of available resources to satisfy the most important wants.
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