the scale of Preference and Definition 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 preferences, the most pressing wants come first and the least pressing ones come last. It is after the first on the list has been satisfied that there will be room for the satisfaction of the next.
Mr. Babatunde, a
trader who has only N10,000.00 wants to buy a pair of shoes, a shirt, a cap, a fan, a stove and a pressing iron as shown in the table below
Table 1.1 Babatunde’s Scale of Preference
The table above represents Mr Babatunde’s scales 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, a shirt, a cap and a fan. Because his resources (610,000.00) are limited, he has to afford them based on his resources.
Importance of Scale of Preference
Ranking of needs: Scales of preference help us to rank our needs or wants in order of their relative importance.
Financial prudence: Scales of preference do assist in managing our finances properly
Identification of highest priority: Scales of preference assist individuals to identify quickly the most important 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 preferences facilities optimum allocation of resources
Maximization of satisfaction: Scales of preferences enable economics agents to maximize their satisfaction