Green Bridge Learning Resource For Economics As A Science

Overview

Welcome to the comprehensive course material on Economics as a Science. In this overview, we delve into the fundamental principles that define economics as a social science and explore how these principles shape our understanding of the world around us.

At its core, economics is the study of how societies allocate scarce resources to meet the unlimited wants and needs of its members. This notion of scarcity forms the basis of economic analysis, as individuals, businesses, and governments are forced to make choices due to limited resources. As such, the concept of wants represents the desires of individuals for goods and services, while scarcity highlights the insufficient availability of resources to fulfill all these wants simultaneously.

Moreover, the concept of choice underscores the decision-making process individuals undergo when faced with various options. This decision-making is influenced by opportunity cost, which refers to the value of the next best alternative foregone when a choice is made. Rationality plays a crucial role in this process, as individuals aim to maximize their utility or satisfaction given their constraints.

As we explore the economic problems of what, how, and for whom to produce, we encounter the production, distribution, and consumption of goods and services. These activities are essential to understanding how resources are transformed into finished products, distributed amongst the population, and ultimately consumed to satisfy human wants.

Through the lens of economics as a science, we aim to compare various concepts and apply them to real-world scenarios. This involves interpreting graphs and schedules to analyze economic phenomena and identify potential solutions to economic problems. By engaging with this course material, you will develop a deeper understanding of the principles that govern economic decision-making and contribute to informed discussions on economic issues.

Objectives

Interpret Graphs/Schedules In Relation To The Concepts
Proffer Solutions To Economic Problems
Identify Economic Problems
Compare Various Concepts In Economics And Their Applications

Lesson Note

Economics is often regarded as a science due to its systematic approach to understanding how societies allocate their limited resources to satisfy nearly infinite wants. Economics fundamentally examines how individuals, institutions, and societies make decisions about the production, distribution, and consumption of goods and services.

Lesson Evaluation

Congratulations on completing the lesson on Economics As A Science. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.

You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.

Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.

Economics As A Science: Economics is considered a social science because: A. It uses scientific methods to analyze human behavior and choices B. It studies natural phenomena C. It deals with physical sciences only D. It has no empirical basis Answer: A. It uses scientific methods to analyze human behavior and choices
Which of the following is NOT a characteristic of a scientific study? A. Replicability B. Subjectivity C. Objectivity D. Falsifiability Answer: B. Subjectivity
In economics, the ceteris paribus assumption means: A. All factors are held constant except one B. All factors change simultaneously C. Only demand factors are considered D. None of the above Answer: A. All factors are held constant except one
When economists use models to predict outcomes, they assume that: A. People always act rationally B. People are always irrational C. People never change their preferences D. People have no influence on market forces Answer: A. People always act rationally
Which of the following is a positive economic statement? A. The government should increase taxes on the wealthy B. Unemployment is rising at a rate of 2% per year C. Everyone deserves equal pay D. Pollution is bad for the environment Answer: B. Unemployment is rising at a rate of 2% per year
Economic theories are simplified versions of reality that: A. Include all possible variables B. Assume all factors remain constant C. Are always accurate in predicting outcomes D. Are never based on observations Answer: B. Assume all factors remain constant
In economics, the term "utility" refers to: A. The capacity of a good or service to satisfy human wants B. The measure of production efficiency C. The amount of money in circulation within an economy D. The government's budget for public expenditures Answer: A. The capacity of a good or service to satisfy human wants
The opportunity cost of a decision is: A. The monetary cost of that decision B. The benefits gained from that decision C. The value of the next best alternative forgone D. Irrelevant when making economic choices Answer: C. The value of the next best alternative forgone
Economics examines how societies allocate scarce resources to fulfill unlimited wants. This statement best relates to the concept of: A. Scarcity B. Opportunity cost C. Rationality D. Production efficiency Answer: A. Scarcity

Recommended Books

	Principles of Economics Subtitle An Introductory Text Publisher Cengage Learning Year 2018 ISBN 9781337559720
	Economics: Principles, Problems, and Policies Subtitle Understanding the Basics Publisher McGraw-Hill Education Year 2020 ISBN 9781260247873

Past Questions

Wondering what past questions for this topic looks like? Here are a number of questions about Economics As A Science from previous years

JAMB UTME - Economics - 2002 (Click to take full assessment)

Question 1 Report

In the diagrams, the opportunity cost of a unit of cotton in terms of cocoa is

4 for Ghana; 2 for Nigeria

20 for Ghana; 60 for Nigeria

1/4 for Ghana; 1/2 for Nigeria

5 for Ghana; 30 for Nigeria

View Answer

WAEC SSCE - Economics - 2022 (Click to take full assessment)

Question 1 Report

(a) Explain the following types of taxes:
   i. specific tax
   ii. value-added tax
(bi) With the aid of diagrams, describe the effects of an indirect tax on a commodity when demand is:
  perfectly inelastic
(ii) With the aid of diagrams, describe the effects of an indirect tax on a commodity when demand is:
  perfectly elastic

Answer

(a) Types of Taxes:

Specific Tax: A specific tax is a tax that is fixed and imposed on a particular commodity regardless of its price. It is usually imposed as a fixed amount per unit of the commodity. For example, a government may impose a specific tax of $2 per unit of cigarette sold.
Value-added Tax (VAT): A value-added tax is a tax that is imposed at each stage of production and distribution of a commodity. It is calculated as a percentage of the value added at each stage of production or distribution. For example, if a manufacturer produces a shirt and sells it to a retailer for $10, and the VAT rate is 10%, the manufacturer will pay $1 as VAT. When the retailer sells the same shirt to a customer for $20, the retailer will collect $2 as VAT ($20 x 10%).

(bi) Effects of Indirect Tax on Commodity when Demand is Perfectly Inelastic:

When demand is perfectly inelastic, a change in price does not affect the quantity demanded. Therefore, the imposition of an indirect tax on the commodity will not affect the quantity demanded. The entire burden of the tax will be borne by the consumer, and the price paid by the consumer will increase by the full amount of the tax. The diagram below illustrates the effects of an indirect tax on a commodity with perfectly inelastic demand.

the demand curve is perfectly vertical, and the supply curve shifts upward to represent the tax. The vertical distance between the old and new supply curves represents the tax, and the entire burden is paid by the consumer as the price paid increases by the full amount of the tax.

(ii) Effects of Indirect Tax on Commodity when Demand is Perfectly Elastic:

When demand is perfectly elastic, a small increase in price will cause the quantity demanded to fall to zero. Therefore, the imposition of an indirect tax on the commodity will result in the entire burden of the tax being borne by the supplier. The price paid by the consumer will remain the same, and the supplier will have to bear the full amount of the tax. The diagram below illustrates the effects of an indirect tax on a commodity with perfectly elastic demand.

the demand curve is perfectly horizontal, and the supply curve shifts upward to represent the tax. The vertical distance between the old and new supply curves represents the tax, and the entire burden is paid by the supplier as the price received remains the same.

Answer Details

(a) Types of Taxes:

Specific Tax: A specific tax is a tax that is fixed and imposed on a particular commodity regardless of its price. It is usually imposed as a fixed amount per unit of the commodity. For example, a government may impose a specific tax of $2 per unit of cigarette sold.
Value-added Tax (VAT): A value-added tax is a tax that is imposed at each stage of production and distribution of a commodity. It is calculated as a percentage of the value added at each stage of production or distribution. For example, if a manufacturer produces a shirt and sells it to a retailer for $10, and the VAT rate is 10%, the manufacturer will pay $1 as VAT. When the retailer sells the same shirt to a customer for $20, the retailer will collect $2 as VAT ($20 x 10%).

(bi) Effects of Indirect Tax on Commodity when Demand is Perfectly Inelastic:

(ii) Effects of Indirect Tax on Commodity when Demand is Perfectly Elastic:

View Answer