Definition, nature, importance and branches of economics

Definition of economics

Economics: is a science which study human behaviors as a relationship between ends and scarce means which have alternative uses.
Is define as an enquiry into the nature and causes of the wealth of the nation.
Can also be defined as the study of how man and his society, choose with or without money the use of money to employ scarce productive resources where could has alternative uses to produce various commodity.
Can also be defined as the study of mankind in his ordinary business of life.


A. Economics is said to be a science because it uses scientific method to build theories that can help explain the behaviors of individual, group and organization.
B. It attempt to explain economic behaviors which arises when scarce resources are explained.
C. It’s a body of knowledge. It’s a way of thinking that emphasizes putting forward basic hypothesis and then doing control experiment and coming up with a generalisation that eventually became a law.
D. It use qualitative and quantitative tool to understand trends. It also use statistic and mathematic theory, test hypothesis to forecast what will happen in the future.


  1. Scarcity
  2. Choice
  3. Scale of preference
  4. Opportunity cost
    A. Scarcity: simply means the resources is not enough to satisfy the need of the individual
    B. Choice: choice simply means the problem to scarcity
    C. Scale of preference: Is the systematic arrangements of wants or ends in their order of preference/priority/importance. E.g payment of salaries, building of schools, construction if roads and bridges, scholarship. The one, that is more important to the country will be done first.
    D. Opportunity cost: Refer to as the forgone alternative or real cost of the choice we’ve made.
    A. What to produce
    B. How to produce
    C. Whom to produce
    D. How the resources will be used efficiently
    A. What to produce: Society must decide what to produce and in what quantity based on the available resources.
    B. How to produce: it has to do with the method of technology. For instance we’ve labour intensive and capital intensive
    Labour intensive→ use of labour instead of machine
    Capital intensive→ use of machine instead of labour.
    Importance of studying economics
    A. Since economics is a discipline i.e a body of knowledge, it is necessary to study it as the matter of seeking knowledge for its own sake.
    B. Some understanding of economics is necessary so that we can be well informed citizen.
    C. Many of our day to day problems and discussion in the society have some economics aspect and it’s only necessary to know of this, so as to discuss intelligently the study of economics.
    D. It enables an individual to understand better relationship between him and his fellow human being in his effort to make a living.
    E. Economics provides us with skills ( tools and knowledge) needed to make rational decision in our day to day activities.
    F. It enables us to understand and appreciate various government policies when choices are to be made and it provides rational guide to firms and government in the allocation of resources.
    G. It enables us to be able to apply the principle to solve practical questions and thus avoid spending unnecessary money.
    H. Economics is a subject that can be enjoyed because it has intrinsic values.
    I. It provides job opportunities: the wide range of skills develop through studying economics especially to degree level, open up many divers job opportunities to graduates and even non-graduates.
    A. Micro economics
    B. Macro economics
    C. Positive Economics
    D. Normative economics
    A. Micro economics: This deal with the decision making of an individual. By Adam Smith
    B. Macro economics: It is concerned with the overall importance of economic, firm or house. By John maynarot Keynes

Oluwamuyide Peter

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