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Difficulty: MediumDefinition and Scope of Economics

A poultry farmer in Abakaliki spends ₦150,000\text{₦}150,000 to purchase automated feeding equipment instead of expanding his battery cage capacity. According to Lionel Robbins' definition of economics, which of the following represents the real economic cost of this decision?

  1. The expansion of the battery cage capacity that was sacrificedAnswer
  2. B
    The monetary expenditure of ₦150,000\text{₦}150,000 incurred on the feeding equipment
  3. C
    An outward shift of the poultry farm's production possibility curve
  4. D
    The total financial profit expected from operating the automated feeder

Answer

The expansion of the battery cage capacity that was sacrificed represents the real economic cost.
According to Lionel Robbins, economics focuses on allocating scarce resources among competing ends. The true economic cost of acquiring the automated feeding equipment is the next best alternative that had to be foregone—namely, the expansion of the battery cage capacity.

Step-by-Step Solution

1
Identify the core subject of Lionel Robbins' definition of economics.
Robbins defines economics as studying human behavior as a relationship between ends and scarce means which have alternative uses.
Economic decision-making requires choosing between competing ends due to scarcity.
2
Distinguish between money cost and real (opportunity) cost in the scenario.
The financial cost is ₦150,000\text{₦}150,000, but the real economic cost is the alternative project given up (battery cage expansion).
Opportunity cost evaluates the sacrificed satisfaction of the next best alternative rather than the cash paid.

Key Concept

Lionel Robbins' Definition of Economics and Opportunity Cost
Estimated Time:1m 0s
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Topics

Definition and Scope of Economics

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