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21902_SS ! Lesson Note 2

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21902_SS ! Lesson Note 2

Uploaded by

angel
Copyright
© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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The Importance Of Studying Economics

(1) Human wants: The study of economics is important because it deals with
human beings and the satisfaction of their numerous wants with their
limited available resources
(2) Allocation of scarce resources: As a result of the fact that the resources at
the disposal of man are not in abundance, it becomes necessary for us to
study economics and decide the best way to utilize it for maximum
satisfaction in the face of numerous needs.
(3) Production: We also study economics because it deals with fundamental
questions of what, where, for whom and how to produce goods and
services in order to satisfy human wants
(4) Distribution: After production, economics goes further to study how goods
and services produced are to be distributed.
(5) Logical thinking: The study of economics helps to develop in us an
inquisitive, well balanced and highly philosophical and logical thinking
mind.
(6) Human behaviour: The study of economics enables us understand
individual differences and why people behave the way they do in their
material pursuit.
Why Economics is a science subject.
Economics is called a science subject because it uses scientific measures to
explain, observe phenomena and predict the outcome of future events. This
scientific method of observation is generally referred to as inductive method.
Economics is a body of knowledge arranged in orderly manner and this
knowledge is obtained by observing human beings, their behaviours and their
social environment. The facts obtained from this observation are tested in order
to arrive at certain laws like laws of demand and supply, law of diminishing
returns, law of diminishing marginal utility etc. These laws have been empirically
tested within the society and experimented on the production, distribution and
consumption of goods and services.
Economics, unlike the pure science subjects does not arrive at definite conclusion
because human beings are not consistent in their behavior and as such, cannot be
predicted. Economics coined the Latin phrase “ceteris paribus” (all other things
being equal) to confirm the uncertainty of their laws and conclusions. Economics
uses normative statement which states what ought to be and cannot be refuted
by contradictory evidence.
Branches of Economics
Economics is divided into two main broad areas namely
(i) Micro-economics
(ii) Macro-economics
Micro-economics studies basic decision-making by unit of households, firms and
governments.
Macro-economics on the other hand deals with the aggregate economic problems
of the society at large. It studies inflation which is concerned with the general
level of prices and as its effects on everybody in the society, national income
aggregate level etc.
Economics can also be categorized into Pure and Applied categories.
Pure Economics involves a body of laws, theories or principles derived from the
study of economic behaviour.
Applied Economics is concerned with the use of laws, theories, or principles in
the analysis and solving of contemporary economic problems. There are other
branches of economics like
Monetary Economics which deals with money and banking
Public Finance which is about taxation, public revenue and expenditure.
Business Economics which deals with trade, business organizations and
accounting.
Development Economics that handles economic planning or development plan
and national economies.
Mathematical Economics or Econometrics which deals with data collection,
analysis and statistics.
Demography- A branch of economics that deals with population issues
Industrial Economics which talks about personnel management, labour and
industrial relations.

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