Economics- Meaning And Its Basic Concepts

Economics- Meaning And Its Basic Concepts

Defination:Economics just like other social science subject has no specific definition. As there are so many ECONOMICS, also there are many definitions of the Economics-subject. These definitions mainly depends greatly on the perception of the definer of the subject. These unavoidable variation in the definition of Economics aries because of those fact that the subject studies mostly on human beings and their behaviors, which can never ever be the same. These human behavior divergents are subject to different interpretations. To substantiate all arguments that Economics has definitions multi-farious, we will bring out some definitions that is given by those we really consider as most authorities in the feild of Economics.

Adam smith in(1776): ”an investigations into the nature and the out come of the wealth of nations”. john stuart Mill in the year 《1843》:”the science pratical of the wealth distribution and production. Alfred Marshal in the year(1890): “A study of all mankind in the ordinary business of life”.

Therefor, all the definitions of Economics are adduced by the Economists,one of the mostly and highly acceptable by the generality of Economists is the one that is forwarded by professor (Lord)Lionel C. Robbins in the year 《1932》. According to Professor Robbins and his definition, that Economics can be simply defined as “a Science that talks about Human behavior that is based on a relationship between Ends and Scarce means that have its alternative uses“. the above definition is so warming because it embodies the basic concepts of Economics and there main fundamental problems involves man-scarcity,choice,want,opportunitycost and exchange. To properly define the above explanation that is adduced by Robbins, we finally decided to underline the key words.

According to Robbins’ definition, Economics is there for a science,and below is an explanation the reason Economics is called a science. Economics is actually a science which studies all about human behavior and dose not make a natural or pure science But a social science. 

This is the reason why Economics is also known as a science that studies scarce resources. As a result of the insatiable and unlimited nature of human needs, coupled with the scarce resources that is mainly used in the satisfaction of these want. human beings are faced with trials and problems of scale of preference,choice,scarcity,wants, and opportunity cost.

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These human want are numerous relative to resources used in satisfying them. then scarce simply means, the limited available resources used in satisfying numerous  human wants.

Economics- Meaning And Its Basic Concepts


Economics reviles the following basic aspect of human lives

  • WANTS: Wants can be defined as the desire or wish to acquire goods and services that brings satisfaction. Human beings always need so many things at a particular time. There are basic needs or wants of man, which are food,shelter,and clothing. When these besic needs/wants of man are satisfied, other needs will come up. This are the reasons why we say that human wants are insatiable. And that is because, human wants are unlimited while resources used in other to satisfy them are limited.
  • SCARCITY: Scarcity simply means to those limited available resources used in satisfying the unlimited human wants. These resources are scarce relative to their own demand. this is a result of scarcity, of resources which made the study of Economics very essential, there by in other to find alternative uses of these scarce resources. The available resources can never satisfy all human wants. However human wants are instatiable relatives or unlimited to the available resources, we choose the most important ones and leave those that are less important because the resources are scarce.

For example, FIVE student needs FIVE pairs of school sandals  but they are able to buy THREE pairs of school due to the insufficiency of resources (MONEY ),it equally implies scarcity of school sandals that is relatively to the needs of all the students . 


ECONOMICALLY, resources those things are material,time, product recourses,money etc. are relatively scarce to the people’s demand.The producers,consumers as well as the government who must definatly face the problem of scarcity. And this leads us to the study of what to produce, how to produce,for produce and how to distribute.



scale of preference means a list an individual wants in order of their relative importance. These drawing of scale of preference will be easier for choice to be made. Since the human wants are always unlimited and the available resources used in satisfying those wants, which are limited and cannot satisfy all the human wants;This hierarchicalization of needs is unavoidable just as a result of limited resources, which helps  one to make a rational choices. For example a student who is desperatly in need of sandals,biro,shoes,textbook,shirt,trousers, exercise books, etc.  but limited resources,may draw his scale of preference just like this:-

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Table 1 A student’s Scale of 


Asuming the student has N20.00 at the time he needed the above items;judging from her scale of preference above can be affordable to purchase.only  exercise book,sandals,and textbook. Just as a result of her limited available resources of N20.00 that relate to her needs. Those student will therefore face the consiquences for choice and opportunity cost.

When a student makes or follows the use of the above table i .e according to how important they are,and how the student is also said to behave rationally.



choice always involves decision making .

Choice comes as a result of numerous human wants and also the scarcity of the resources used in satisfaction of wants. Choice aries as a result of scarcity. Choice refers as act of selecting or choosing some needs for satisfaction. Others based on the resources available to the person who makes the decision. Man are faced with the problem of choice because when  some needs are satisfied,other needs will aries. Human being must choose the most pressing or important wants for satisfaction that is based on the resources within his reach. Government also makes choices on how to allocate the available resources concerning about the services and goods to produce for his/her citizens and the normal proportion of the resources to each and every sector such as  agricultural sector health sector,educational sector, administration etc. For firms a choice of any kind of business to embark upon wages to pay, forms of the distribution to embark upon must be made because of the limited resources. 

Conclusively, the government, individual and firms have finally choose between alternative in other to achieve their objectives i.e maximization of utility,provision of services or walfare and maximization of profit respectively.



Opportunity cost is said to be an alternative sacrifice made in other to satisfy another want. It is also define as the need that is left unsatisfied in order to please another important need. For example,in the student’s scale of preference above;the cost of the textbook,biro,sandals,and exercise book those ones mentioned are bought, but the trousers,shirt and shoes are left unbought.

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The trouser,shoe,and shirt which were left unsatisfied are known as an alternative forgone or sacrifice is known in real or true cost or  Economics opportunity cost.



Opportunity cost is like other basic concept of Economics scarcity,scale of preference and choices are very important to an individual who always represents the household or consumer, or product unit and the government. The government formed the three decision making bodies in an economy the concept of opportunity cost which arise from choice which is central to the subject~matter of economics and it comes as a result of the limited available resources.

Also, opportunity cost is important because,it shows that every activity involves a sacrifice whether on the side of an individual,a firm or government. Since every economics problem involves choices and every choice also involves in opportunity cost,therefore,opportunity cost is very important. Just as the government ,opportunity cost helps in the preparation of its budget. The government will now decide the sector to allocate more resources. Government may therefore,allocate more resources to education at the expense of other sector. Opportunity cost also helps or aids a government in policy making. Finally, there is an element of opportunity cost just as the activities of an individual, a firm and a government.




This concept of opportunity cost is very relevant to the Economics of West African Countrirs. The concept that is emphasize as the basic problem of choice which is the major core subject matter of Economics as the result of limited available resources vis-a -vis unlimited human wants. Since every choice involves opportunity cost, and every economic problems involves choice, therefore, every opportunity cost is relevant to the economies of West African Countries. Moreover, the concept is relevant because it involves all allocation of scarce resources to important areas of need. It also shows that each and  every activity that involves a sacrifice whether on the said of an individual, a government or a firm.


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