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BASIC ECONOMIC PRINCIPLES AND FACTORS OF PRODUCTION
CONTENT- Basic Economic Principles
- The Factors of Production
Basic Economic Principles
Economics is a social science which studies human behavior as a relationship between ends and scarce means which have alternative uses. It deals with production, distribution, exchange (marketing) and consumption of agricultural goods. Basic Economics principles include;- wants.
- scarcity.
- choice.
- scale of preference.
- opportunity cost.
- law of diminishing returns.
Wants
These are goods and services desired after the basic needs have been satisfied. In agriculture, the wants includes inputs needed for production services e.g. planting materials, fertilizers, chemicals, tools and implements, land for cultivation, livestock feeds, etc.Scarcity
It is a term used to express that available commodity or service is limited in supply or not enough for those who demand for it. The limited nature of resources affects the production of crops and animals. This makes the farmers to make use of what they have.Choice
Choice arises because of scarcity of resources and is guided by economic decision. This is the point where farmer takes a decision on what to buy, how much to buy, where to buy, what to produce, where to plant, etc. Every decision is a choice between alternative.Scale of Preference
It is a list or arrangement of human wants in order of their relative importance. The farmer has to choose from the list of his unlimited wants since resources to satisfy them are limited.Opportunity Cost
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