Economics: The Inescapable Power of Scarcity and Choice | Economics SHS1 Sem1 Week1 (NaCCA/WASSCE)

Why You Can’t Have Everything: The Scarcity Principle

Imagine you have a small bag of groundnuts (Abe). All 30 students in your class want the entire bag. This simple problem is the foundation of all Economics. Resources are limited (the small bag), but wants are unlimited (everyone wants all of it). This gap—where unlimited wants meet limited resources—is called Scarcity. Scarcity is not just about being poor; even rich people have limited time or limited land. Because of scarcity, we are forced to make Choices. Economics, therefore, is simply the study of how individuals and societies make choices to allocate those scarce resources to satisfy unlimited wants.

• Goods vs. Services: A Good is something tangible you can touch, like a textbook or a chair. A Service is something intangible someone does for you, like the teacher instructing you or a barber cutting your hair. Both require scarce resources to produce.
• The Scale of Choice (Micro vs. Macro): Microeconomics is like studying a single tree; it focuses on small decisions, such as why the price of tomatoes went up. Macroeconomics is like studying the entire forest; it focuses on big picture issues affecting the whole nation, such as Ghana’s total unemployment rate or national inflation.
• Fact vs. Opinion (Positive vs. Normative): Economists use two main types of statements. Positive economics deals with objective facts (“What IS”). Example: “Ghana’s GDP grew by 5% last year.” Normative economics deals with value judgments and opinions (“What OUGHT to be”). Example: “The government OUGHT to spend more money on education.”

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