Question 3
Almost all the candidates attempted this question and scored relatively high marks. The question required candidates to define wants, scarcity, scale of preference, opportunity cost and explain any four reasons why the study of Economics is important to society. Most candidates could define the concepts in the (a) part with relevant examples but only few were able to adequately explain reasons why the study of Economics is important in the (b) part of the question. Candidates were expected to answer thus to score higher marks.
- (i) Wants refer to the insatiable desires of a person to own and consume goods and
Services that give him satisfaction.
(ii) Scarcity means that while human wants are unlimited, the resources to satisfy
them are limited in supply.
(iii) Scale of preference refers to a list of wants arranged in order of importance with the most important want coming first on top of the list.
(iv) Opportunity cost is the expression of cost in terms of foregone alternative after a consumer has made a choice between alternatives.
- (i) It helps individuals in objective, critical and rational thinking.
(ii) It helps individuals understand national economic issues.
(iii) It helps individuals make rational choices in using their scarce resources.
(iv) It helps the government manage its resources in terms of income and expenditure.
(v) It helps firms to know how to manage their resources and their production plans.
(vi) It guides the government in formulating development plans.
(vii) It enables individuals understand international issues.
(viii) The study of Economics is a requirement for further studies or entry into other
professions.
(ix) It enables mankind to build theories and tools for economic analysis.