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SCALE OF PREFERENCE

Definition of scale of preference Scale of preference is defined as a list of unsatisfied wants arranged in the order of their relative importance. In other words, it is a list showing the order in which we want to satisfy your wants arranged in order of priority

HOW TO USE SCALE OF PREFERENCE

In the scale of preference, the most pressing wants come first and the least pressing ones come last. It is after the first in the list has been satisfied that there will be room for the satisfaction of the next. Choice therefore arises because human wants are unlimited or numerous, while the resources for satisfying them are limited or scarce. For e

Mr. Babatunde, a meaning of economicstrader who has only N10,000.00 wants to buy a pair of shoes , shirt, cap, fan , stove and pressing iron as shown in table below

Table 1.1 Babatunde’s scale of preference   

Items neededPrice(N)
Shoe3,500.00
Shirt1,000.00
Cap500.00
Fan5,000.00
Stove3,500.00
Pressing iron4,000.00

The table above represents Mr. Babatunde’s scale of preference; he has carefully arranged all numerous wants in order of priority. Since Mr. Babatunde has only 610,000.00, he can only purchase a pair of shoes, shirt, cap and fan. Because his resources (610,000.00) is limited, he has afford based on his resources.

Importance of Scale of Preference

Ranking of needs:  Scale of preference helps us to rank our needs or wants in order of their relative importance.

Financial prudence: Scale of preference does assist in managing our finances properly

Identification of highest priority: Scales of preference assists individuals to identity quickly the most importance needs among others.

Rational choice: Scale of preference assists individuals, firms and governments to make rational choices in the list of wants.

Efficient utilization of limited resources: Scale of preference also helps individuals to make efficient utilization of available resources

Optimum allocation of resources: Scale of preference facilities optimum allocation of resources

Maximization of satisfaction: Scales of preference enables economics agents to maximize their satisfaction 

 

  1. loans for businesses
  2. how to establish enterprises
  3. what is a firm
  4. price equilibrium
  5. scale of preference
  6. concept of economics
  7. economic tools for nation building
  8. budgeting
  9. factors affecting the expansion of industries
  10. mineral resources and the mining industries

    

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