The basic concept or elements of economics are:
Wants:
Want may be
defined as an insatiable desire or need by human beings to own goods or
services that give satisfaction. The basic needs of man include; food, housing
and clothing. Human needs are many.
They include
tangible goods like houses, cars, chairs, television set, radio, e.t.c. while
the others are in form of services, e.g. tailoring, carpenter, medical; e.t.c.
Human wants and needs are many and are usually described as insatiable because
the means of satisfying them are limited or scarce.
There are four essential elements of human wants. i. Scarcity of things
ii. Desire to get the scarce things
iii. Sufficient amount of money to satisfy the desire.
iv. Willingness to spend the money to get the desired
things.
Human wants are unlimited, varied and diverse. They encourage people to undertake
economic activity. Satisfactions of wants through production
and exchange of goods and services is the basic aim of economic activity.
Wants may be classified into two broad categories.
1. Primary or basic wants e.g., food, clothing and shelter which are common to all persons;
and
2. Secondary or non‐basic wants e.g., education, travelling, etc., which differ from person to
person.
A person first of all tries to satisfy his primary wants at all costs. Secondary wants are satisfied as and when the necessary resources become available.
Scarcity:
Scarcity can be
defined as a situation in which human wants are greater than the capacity of
available resources to provide for those wants. In other words, it means that
people want more than is available. Economic resources are limited, but human
needs and wants are infinite. Indeed the development of society can be
described as the uncovering of new wants and needs - which producers attempt to
supply by using the available factors of production.
Making choices Because of scarcity, choices have to be made on a daily basis by
all consumers, firms and governments.
When a product is scarce, consumers are faced with conducting their own cost-benefit
analysis, since a product in high demand but low supply will likely be expensive. This means that the consumer should only take action and purchase the product if he or she sees a greater benefit from having the product than the cost associated with obtaining it.