Basic Economic Problems of Nigeria

The Central Economic Problem: Scarcity

Economics studies how individuals and societies use limited (scarce) resources to satisfy unlimited human wants. Because resources are scarce, every society, including Nigeria, must make choices.

The Basic Economic Questions

• What to produce? Which goods and services should be produced, and in what quantities?
• How to produce? What methods, resources and technology should be used?
• For whom to produce? Who gets to consume the goods and services produced?

Specific Economic Problems Facing Nigeria

• Scarcity of resources relative to the needs of a large and growing population.
• Unemployment — inability of the economy to provide jobs for all who are willing and able to work.
• Inflation — a persistent rise in the general price level, which reduces purchasing power.
• Over-dependence on oil — reliance on a single export commodity makes the economy vulnerable to price shocks.
• Poor infrastructure — inadequate power supply, roads and other facilities raise the cost of production.

Opportunity Cost

Because resources are scarce, choosing to produce or consume one thing means giving up another. The next best alternative given up is called the opportunity cost of a choice — a key concept tested in WAEC, NECO and JAMB Economics.