(a) State Professor Robbins’ definition of Economics.
(b) Explain the following concepts:
(i) opportunity cost;
(ii) scale of preference;
(iii) production possibility curve.
(c) Outline three reasons for the study of Economics as a Subject.
Explanation
(a) Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.
b)(i) Opportunity cost:- This is the alternative forgone or sacrificed any time an individual makes a choice. It is the expression of cost in terms of forgone alternative.
(ii) Scale of preference:- This is the list of the wants of an individual in order of priority starting with the most important to the least important.
(iii) Production possibility curve:- This is a curve that shows the possible combinations of two commodities that can be produced in an economy with the available resources and technology.
(c)(i) It helps to solve the basic economic problems of the society.
(ii) It helps in making rational choices by drawing scales of preference.
(iii) It helps to promote welfare by emphasizing opportunity cost.
(iv) It gives intellectual training on economic problems by training the mind to reason logically.
(v) It helps to predict economic trends in an economy with some level of precision.
(vi) It is useful in the study of other disciplines like engineering, business administration etc.
(vii) It helps the individual to understand the economic policies of government e.g. budget.
(viii) It helps individuals to acquire skills which are useful in various jobs and professions.