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SS1: Economics – Introduction to Economics & Basic Concepts | Theory Questions

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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.

 

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