The fundamental concept or the elements that comprise economics are: wants scarcity, the scale of preferences as well as opportunity cost and choice.

Wants

It is simply the desire or desire to have products or services that provide satisfaction. Goods are things like radios, cars, food houses, books, etc., (that is tangible items) and services include hairdressing, the work of an actor etc(that is intangible products). They are also known as Ends.

Once these fundamental requirements are met, additional demands will come up. This is the reason humans’ needs are endless. The reason is that human desires are unlimitable, while the resources utilized to satisfy them are limited.

SCARCITY

The word scarcity refers to the comparatively small amount of resources that are available for satisfying the infinite human needs.

These resources are limited in relation to their demands. This is because of the dearth of resources that makes an understanding of economics crucial to identify alternative uses for the scarce resources. The resources available do not meet every human desire. Since human needs are infinite or unsatisfying with respect to existing resources available, we need to select the most urgent needs and ignore others that are less significant because resources are limited.

As a student, you’ll require school supplies, e.g exercise books worth #100.00 but you only have #50.00. It can be observed that the amount that you’ve got (#50.00) which is your money are not enough to purchase everything you require. The resources that are available within the world will never ever be enough to satisfy the needs of all humans.

If the resources were infinite or abundant and abundant, there would be no economics issue would arise and there is no need to research study in economy. Scarcity is the primary or fundamental economic issue

SCALE OF PREFERENCE

Scale of Preference refers to an unsatisfied list of wants placed in order of their importance.

A scale of preference is referred to the list of desires that are not satisfied that are arranged in order of importance or priority. This assists in decision-making. The most urgent needs are first ranked, then the less urgent ones.

It is a listing of the order we’d like to meet our desires, arranged in the order of importance.

The sketch of the scale of preference makes it easier to make a choice be made. To achieve the highest level of satisfaction using the limited resources available, they must consider individual, firm, and unsatisfied desires in order of priority.

Every person is believed to have a level of preferences. This is due to the fact that economists theory supposes that people act rationally and will meet their primary need first.

For instance, a pupil may rank his desires in the ascending order based on their importance

1. Uniforms for school
2. Exercise books
3. Wrist watch
4. Dictionary
5. Scientific calculator
6. An arm chair

If he must choose between the options 1 and 4 he selects the first. The preferences of companies, individuals or those in the government differs from time to time.

A scale of preferences may not be a formal list. It can be a mental list. For instance, Mr. John is a trader with just #10000 wants to purchase an item of footwear or a shirt, cap fan, stove, and pressing iron as described in the table.

JOHN’S SCALE OF PREFERENCE

The table below represents Mr John’s preference scale. He has meticulously arranged his wants in order of importance.

As Mr. John has a total of $10, 000.00, he can only buy a pair of cap, shirt, shoes and a fan. Since his money ($ 10,000.00) are not enough and he must choose the top four items is within his budget based on the resources available.

IMPORTANCE OF SCALE OF PREFERENCE

1. Needs assessment
2. Financial prudence
3. The identification of top priority
4. Rationale choice
5. Effective use of resources
6. Affecting resources optimally
7. The maximisation of satisfaction

The significance of the scale of preference could be summarized in this manner:

1. It assists individuals in putting their requirements in order of importance.
2. It assists us in managing our resources effectively.
3. It assists both the individual as well as the government to pinpoint the most pressing demands.
4. It improves the efficiency of resource allocation.
5. It aids individuals, companies as well as the government with efficient use of resources.
6. It assists economic agents to increase their satisfaction.
7. It aids individuals in making the right decisions.

CHOICE

The term “choice” can be described as the process of choosing or selecting one option from many options. Human needs are diverse and we can’t meet all of them due to our resources.

Therefore, we must determine which of the desires we will be able to be able to satisfy first. The decision is a result of our many desires and the insufficiency of resources available to meet these desires.

OPPORTUNITY COST

Opportunity cost can also be referred to as a real expense or time cost.

The term “opportunity cost” is employed to describe the concept of opportunity cost in the field of economics to define the cost in terms of sacrificed choices or options sacrificed. Opportunity cost refers to the alternative of sacrifice or foregone with the intention of satisfying a different need. It’s the satisfaction of one’s desire with the loss of another desire.

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