Economics SHS 1 – Week 1 Lesson

Welcome to Economics: Understanding Scarcity and Choice

As SHS students in Ghana, you make economic choices every single day—whether it’s deciding between buying ‘koko’ or bread, or choosing which subject to dedicate more study time to. Economics is not just about money; it’s about making smart choices in a world where resources are limited.

The Foundation of Economics: Scarcity and Allocation

The core problem that defines Economics is Scarcity. Simply put, we cannot have everything we want. Human wants are unlimited, but the resources needed to satisfy those wants (like money, time, or land) are limited.

Economics, therefore, is defined as:

• The study of how individuals and societies allocate scarce resources to satisfy unlimited wants.

Key Economic Concepts and Agents

To understand the economy, we must first define the players and the products:

• Goods: Tangible items you can touch, like a textbook, a desk, or a bag of rice.
• Services: Intangible activities provided by others, like teaching, cleaning, or a doctor’s consultation.
• Resources: The inputs used in production (often called factors of production).
• Economic Agents: The decision-makers in the economy: Households, Firms (Businesses), and Governments.

Two Essential Branches of Economics

When studying economic issues, economists divide the field into two major branches:

1. Microeconomics (The Small Picture)

• Focuses on the behavior of individual economic units: single households, firms, and specific markets.
• Example: Analyzing why the price of plantain increased at Makola Market.

2. Macroeconomics (The Big Picture)

• Focuses on the aggregate (overall) performance of the entire economy.
• Example: Studying Ghana’s national unemployment rate, inflation, or the overall growth of the economy (GDP).

Fact vs. Opinion: Positive and Normative Economics

Economists must be able to distinguish between factual analysis and value judgments. This leads us to two types of economic statements:

Positive Economics (What Is)

• Deals with objective facts and cause-and-effect relationships. It can be tested and proven true or false.
• Example: “Ghana’s government introduced free primary education.” (A testable statement).

Normative Economics (What Ought To Be)

• Deals with value judgments and opinions about what the economy should be like. It often uses words like “should” or “ought to.”
• Example: “The government should provide subsidies for farmers.” (An opinion/policy recommendation).

Charting Your Career Path in Economics

The study of economics opens doors to diverse and critical careers in both the Private and Public sectors, helping to shape Ghana’s future. An economist is a professional who studies production, distribution, and consumption using data and theories.

• Public Sector Careers: Policy Analyst at the Ministry of Finance, Research Economist at the Bank of Ghana, or roles in various governmental statistical agencies.
• Private Sector Careers: Financial Analyst in banking, Investment Banking, Consultancy, or Entrepreneurship and business development.

Economics teaches you how to think critically and make rational decisions—skills essential for success in any field.