Economics
Learning Units
Introduction National Income
Nature of Economics Accountancy
Methods and tools of Business cycles,
Economic study unemployment and
Economic Resources, inflation
Economic Sectors, Basic Monetary and Fiscal
Economic Problems Policies
Economic Systems International Trade
Concepts of demand and Economics Growth and
supply Development
Circular flow of Economic Special Topic
Activities
Economics
Economics is a social science concerned with
the production, distribution, exchange and
consumption of goods and services.
Greek word “Oikonomia”=househols
management.
Economics is the proper allocation and
efficient use of available resources for the
maximum satisfaction of human wants.
Proper allocation = budget
Scarcity = not enough
Related Subject
Sociology – about daily living, budgeting
Political Science – government policies
History – study of past events
Geography – study of location and land
Physics – it provides machines and
electricity
Religion – beliefs of certain groups
Definition of Terms
Scarcity - When there is not enough
resources to meet the needs of everyone
who want to use it.
Goods – tangible; anything which yields
satisfaction to anyone.
Tangible – direct (material things)
Intangible – form of service
Services – yields of satisfaction intangible.
Methods of economics
Empirical Method - scientific methods in
gathering data, analyzing and making
conclusions. (generalization)
Economic Principles – are generalizations
Ceteris Paribus – which means “another
things being equal” or “constants”; all other
things are equal or constant.
Two Divisions of
Economics
Microeconomic – deals with the economic
behavior of individual units such as the
consumers, firm and the owner of factor of
production.
Macroeconomic – deals with the economic
behavior of the economy or its aggregates
such as government business and
households.
Two Types of Goods
Luxury – goods which you can live without
them (wants)
Cell phones
Essential – goods which you cannot live
without them (needs)
Food
Clothing
Shelter
Basic Tools in
Production
Land – consists of God-given natural
resources.
Soil
Water
Air
Food supply
Fuel
Raw materials
It may also be the space or manmade structure
where a factory is built.
Labor – the people who work for the
production of goods and services for the
community.
Ordinary workers in farms
Factories
Offices
Schools
Capital – the material things used to produce
goods and services. (man made goods)
It can be money or other goods which multiply into
new goods and services.
Money
Building
Machineries
Management – anyone who performs
the role of the organization is the manager-
entrepreneur. (entrepreneur)
Government – where the goods and
services are produced.
Three Economic
Problems
What are the goods and services to produce
and how much to produce
How to produce the goods and services
For whom are the goods and services
(distribution)
Two Types on How to
Produce
Manual – unemployment
Machine – quality and quantity
History of Economics
1776 – Adam Smith (Wealth of Nation)
Adam Smith – Father of Modern Economics
Economic System
Economic System - set of economic
institution that dominates a given economy
Institution – a set of rules of conduct
objective solve economic problems.
Goal – give satisfaction to consumers and
promote high standard of living.
Economic System
Models
Capitalism – owned and managed by private
individuals
Market economy Laissez
Free enterprise Faire
Economic freedom – presence of religion
Profit motive
Free competition – private property
No government – laissez faire
Communism – the factor of production
and distribution are owned and manage by
the state.
State – refers to the government
Command economy and classless society
Classless society
No economic freedom
No profit motive
No free competition
No private property
Socialism – combination of capitalism and
communism.
Transportation = LRT, MRT
Electrification = NPC, Meralco, cooperatives
Water = Maynilad, MWSS
Food
Clothing Private
Services
Concepts of Demand &
Supply
Market – interaction of different people.
Interaction between buyers and sellers.
Interaction of different people for trading and
exchange of goods.
Three Types of Market
Good market
Wet market – fish, meat
Dry market – vegetables, rice and grocery
Labor market – employee and employer,
involves services
Workers offer services and employer will look for
workers to hire.
Stock market – stock or securities of
corporation or market able security.
Three Basic Market
Models
Perfect or Pure Competition
A large number of independent sellers.
Identical products.
East for new firms or sellers to enter the market
and easy to leave the market.
No single seller or no single buyers can influence
the change on market price of a product.
There is no non price competition like advertising,
promotion and packaging.
Pure Monopoly
Single seller or producer
Unique goods or service
Ajinomoto – vetsin
Meralco – electricity
MWSS - water
Difficult to enter the market (hindrance)
Monopolist dictates the price
There maybe or no extensive advertising or sales
promotion; no effort for advertisement.
Natural monopolies – electricity and water.
Monopolistic Competition
Relatively large number of producers or sellers.
Products are differentiated with location, services,
packaging, credit condition, advertising, quality,
physical features.
There is limited control of the, market price
Fuel and Oil companies
Relatively easy to enter the market
There is an aggressive non price competition.
Oligopoly – there is a leader who
dictates the price.
Few sellers/firms that dominate the market.
Product are identical or they are differentiated.
Price agreement among the producers to protect
their own products.
Strong promotion and advertising techniques
used among those who produce different product.
Petroleum products
Difficult to enter the market
San Miguel Beer – Cojuangco
Beer na Beer – Lucio Tan