Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. By Lord Robbins.
Economics may also be defined as a social science concerned with the proper use and allocation of resources for the achievement and maintenance of growth and stability.
SCOPE OF ECONOMICS
The scope of economics refers to the subject matter of economics. The subject matter of economics includes the study of the problems of consumption, production, exchange and distribution of wealth, as well as the determination of the values of goods and services, the volume of employment and the determinants of economic growth. More so, it includes the study of the causes of poverty, unemployment, underdevelopment, inflation, and steps for their removal.
BASIC ECONOMIC CONCEPT
1) GOODS: Goods in economics refers to all things that have value and satisfy human wants. It can be classified into material and non-material goods.
– Material goods: Material goods are those which are tangible. They can be seen, touched and transferred from one place to another e.g. cars, shoes, machines, (buildings – it can be sold at a location and another bought with same money at another location) etc.
– Non-material goods: Non-material goods are intangible as they do not have any shape or weight and cannot be touched or transferred. Services of all kinds such as those of doctors, bankers, teachers, etc. Both material and non-material goods have values and satisfy human wants.
Material goods can be further divided into economic and non-economic goods.
– Economic goods: Economic goods are those which have a price and their supply is less compared to their demands, in essence they are scarce.
– Non-economic good: Non-economic goods are called free goods of nature. They do not have any price and are unlimited in supply. Examples of non-economic goods are air and sunshine.
CONSUMER’S GOODS AND PRODUCER’S GOODS
These are further sub-division of economic goods.
1) Consumer’s Goods: Consumer’s goods are those final goods which directly satisfy the wants of consumers. Such as bread, milk, clothes, furniture etc. Consumer goods can be further sub-divided into Single-use consumers’ goods and durable consumer’s goods.
a) Single-use Consumers’ Goods: These goods are used up in a single act of consumption. Such as foodstuffs, matches, fuel etc. They are consumed directly and satisfy human wants in a single act of consumption.
b) Durable-use Consumers’ Goods: These goods can be used for a considerable period of time. They are not used up in a singular act of consumption such as pen, TV sets, cloths etc.
2) Capital or Producers Goods: These are goods which help in the production of other goods that satisfy the wants of the consumers directly or indirectly. E.g. machines, plants, agricultural and industrial raw materials etc. Producers’ goods are also classified into single-use producers’ goods and durable use producer’s goods.
a) Single-use Producers’ Goods: These goods are used up in a single act of production. Such goods are raw cotton, coal used in factories, paper used for printing books etc. When used they lose their original shape.
b) Durable-use Producers’ Goods: These goods can be used time and again. They do not lose their usability through a single use but are used over a long period of time. Capital goods of all types such as machines, plants, factory buildings are examples of durable-use producer’s goods.