Scarcity: The Essential Concept Driving Ghanaian Economic Choices | Economics SHS 1 SEM 1 WEEK 1 (WASSCE & NaCCA Aligned)

Learning Objectives (NaCCA Aligned Standards)

By engaging with this material, you will be able to:

• Demonstrate knowledge and understanding of fundamental economic concepts, particularly Scarcity.
• Define Economics by relating it to the allocation of scarce resources to satisfy unlimited wants.
• Differentiate between the key branches of study: Microeconomics and Macroeconomics.
• Distinguish clearly between factual economic statements (Positive) and opinion-based statements (Normative).
• Identify various career prospects for economists within the Ghanaian public and private sectors.

I. The Iron Law of Economics: Understanding Scarcity

Economics begins not with money, but with a fundamental problem: Scarcity. Scarcity exists because human wants are virtually unlimited, but the resources available to satisfy those wants are limited. This applies everywhere, whether you are managing your pocket money or the nation’s budget.

Wants vs. Resources: Wants are the endless desires for goods and services (tangible items like a house, or intangible activities like teaching). Resources, often called Factors of Production, are the inputs used to produce these items (Land, Labour, Capital, and Entrepreneurship).

If wants were limited, there would be no need for Economics. The entire study focuses on how individuals, firms, and governments make choices under the constraints of scarcity.

Defining Economics

Based on this core problem, we define Economics as: The social science that studies how individuals and societies choose to allocate scarce resources to satisfy their unlimited wants.

II. Classifying Economic Statements and Branches

Economists use specific frameworks to analyze the world:

Microeconomics vs. Macroeconomics

These are the two main branches of economics. Think of them as looking through a microscope versus a wide lens.

• Microeconomics: Focuses on the behaviour of individual units—households, firms, and industries. (e.g., Why did the price of pure honey fall this month? How does a single bank set its lending rates?)
• Macroeconomics: Focuses on the aggregates or the economy as a whole. (e.g., What is Ghana’s current inflation rate? What policies can the government use to reduce national unemployment?)

Positive vs. Normative Economics

Economists must differentiate between facts and value judgments when discussing policy:

• Positive Economics (What Is): This is objective and fact-based. It describes and explains economic phenomena without expressing opinions. These statements can be tested and proven true or false. Example: “Raising the interest rate will reduce borrowing.”
• Normative Economics (What Ought To Be): This is subjective and opinion-based. It involves value judgments and ethical beliefs about how the economy should work. These statements cannot be tested empirically. Example: “The government should provide subsidies to ensure cheaper fertilizer for farmers.”

III. The Career of the Economist

An Economist is a professional who studies production, distribution, and consumption using data, models, and theories. They are essential decision-makers, especially in Ghana’s developing economy.

Career paths are diverse, falling into both the public and private sectors:

• Public Sector: Roles in the Bank of Ghana, Ministry of Finance, Ghana Statistical Service, or regulatory bodies, often focused on policy analysis and development planning.
• Private Sector: Opportunities in investment banking, financial analysis, market research consultancy, and entrepreneurship, focusing on strategic decision-making and forecasting for profits.

WASSCE Strategy: Pro-tips for Exam Mastery

The most common error in Section A questions is confusing Positive and Normative statements. Remember the golden rule: If the statement contains words like ‘should,’ ‘ought to,’ ‘better,’ or ‘fair,’ it is highly likely to be Normative because it implies a recommended action or judgment, not a verifiable fact. If it simply states a relationship (e.g., ‘If A increases, B decreases’), it is Positive.

Section 3: The Local Laboratory

The Local Lab: Scarcity in the Ghanaian Context

Scarcity drives every major decision in Ghana. Consider the popular dish, Kenkey. To satisfy the unlimited hunger (wants) of Accra residents, we require finite resources: maize, firewood, labour, and transport. The choice of how much maize land to allocate for kenkey production versus, say, cocoa farming, is an economic decision driven by scarcity.

The Makola Market serves as a perfect landmark for viewing unlimited wants. Thousands of customers arrive daily seeking everything from textiles to fresh produce, but the physical space, inventory, and vendor time are limited. This competition for limited goods determines prices.

Finally, major policy like Free SHS is rooted in scarcity. While the policy aims to satisfy the want for universal secondary education, the government faces scarce budgetary resources. The economic choice involves allocating funds to Free SHS rather than, for example, national road infrastructure or healthcare expansion.

Section 4: Self-Check Quiz

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Section 5: The Premium Bridge