Chapter 1

Economics Agriculture Production

 social science concerned with man’s  production on form like planting and
problem of issuing scarce resources to harvesting
satisfy unlimited wants. Economic Resources
Adam Smith  thing need to carry on the production of
 father of economics good and service/ factors of production
 stated “an inquiry information the nature  Land
and cause of the wealth of nation”  natural resources given by or
Basic Terms in Economics found on nature
Goods  earn rent
 yields satisfaction to someone  less supply of land the higher
Consumer Goods the rent to paid
 goods yield satisfaction directly just like soft  Labor
drink  Human effort covers wide
Capital Goods range of skills
 goods used in the production of other  Earn income/wages- the
goods and services return on the use labor
Essential Goods  Supply of labor in a country
 if they are used to satisfy the basic needs of dependent on its production
man such as food, shelter and medicine  Capital
Luxury Goods  Man made goods used in the
 those goods man may do without but are production of good and
used to contribute to his comfort and well services
being  The nation capital is
Economic Goods dependent on its level of
 goods which is useful and scarce SAVINGS- which refers to
Good is Free part of person income which
 satisfy everyone without paying it is not spent
Production  Earns from capital is
 involve information of a commodity such as INTEREST
the conversion of leather into shoes
 Types of Economic System
 Entrepreneur 1. Traditional Economy
 Classified as labor but not  Basically a subsistence economy
ordinary labor  Produces everything that it
 Person combines economic consumes
resources for use in  Carried on in the method used by
production of goods and forefather
services  Production decision is based on
 Entrepreneurship- economic customs and tradition.
goods that command price 2. Command economy
 Earned PROFIT  Owned by the government

Resources Payment  Men who dictate what, how and for

Land Rent whom to produce

Labor Wage/ Salary  Answers to economic problems are
Capital Interest dictated by the government.
Entrepreneurship Profit 3. Market system
 Privately own
 System depend on prices set by the
THE NEED TO CHOOSE
condition of demand and supply
Scarcity
 Competition is supreme
 Refers to the limitation that exist in
 Deals with the economic problems
obtaining all goods and services that people
by considering consumers’ choice.
want
 Goods Market-
 Kakulangan
 Resource Market
 Results on economic problems
4. Mixed economy
 What to Produce
 What to produce and how to
 How shall goods produce
produce are answered
 From whom shall goods produce
predominantly through the price
mechanism, and modified through
government intervention in the form
of direct controls, taxes, ad
subsidies.
Opportunity Cost CHAPTER 2
 When one makes a choice there is Household
always an alternative that has to be  Basic consuming unit
give up Firm
 The value of the alternative is given  Basic producing unit
Society’s Technological Possibilities Production
Inputs  The use of economics resources in the
 Refers to commodities or service used to creation of goods and services
produce the good or service Employment
 Raw materials]  The use of economic resources
 It consist of Consumption
 Land-gift of nature  Goods ready for use
 Labor- human resources STOCK AND FLOW VARIABLES
 Capital- man made durable goods
Output Flow
 Refers to useful goods and services resulting  Quantity measured over a particular period
from production process of time
 Finished product  Example : Income
Stock
The Tools of Economics  Quantity measured as a given point in time
Positive Science Wealth
 Deals with what it is  Is anything of valued owned
Normative Economics  Example: stock
 Deals with what should be Raw materials
 Unprocessed goods
MACRO AND MICRO ECONOMICS Intermediate Goods
Macroeconomics  Goods in process
 That deals with aggregates Final Goods
 Study of economy as a whole  Consist of the finished products
Microeconomics
 Studies economics as a part
Outflows Dry market
 Decrease economic activities  Shoes and clothes
 Examples Labor Market
 Savings – hindi nag cicirculate ang  Workers offer their service and employee
pera Stock Market
 Taxes- because of high tax  Commodities traded consist securities of
 Imports corporation
Inflows Chapter 3
 Increase economic activities Demand
 Example  Willing and able to buy

 Investment  Quantity demanded = Price

 Government Expenditure  Demand = Non Price

 Exports Demand Curve

Monetary Policy  Inverse/indirect relationship

 Includes savings, investment  When demand increase the price decrease

Fiscal Policy  Movement along the curve

 Tax and government expenditure  Downward slope

Trade Policy Substitute Goods

 Imports and Exports  Some benefits the same goods coffee/tea

Complementary Goods

“Limited Resources Unlimited Wants”  Goods that cannot stay without fair
 Phone and Charger

Centeris Paribus Non Price Determinants

 All other things held constant 1. Size of Population

Law of demand and supply  Increase on population increase

 Most important law in economics demands results to demand curve to

 System of exchange in the circular flow the right

Market 2. Quality of Product

 Interaction between buyer and sellers for 3. Taste and Preference

trading exchange  Greater preference for goof will lead

Wet market him to buy more of it even price

 Fish pork chicken unchanged
 4. Expectation of Future Price
 Consumes who expects increase
future income or future prices
increase trends to buy more at the
present time
5. Promotion or Advertisement
6. Religion, customs, tradition
7. Fashion Trend
Demand Curve
Pagmataas and demand to the right
Pagmababa ang demand to the left
Supply
 Sellers willing to sell and able to sell or
produce
 POV Producing Unit
Supply Curve
 When supply increase then price increase
 Direct relationship
Upward sloping
Hoarding
 Hinohold para tumaas and presyo bago
ipagbili
Non Price Determinant
1. Cost of Production
 Expense incurred to produce the
goods
 Increase in cost will normally result
in a lower supply of the goods
2. Availability of Raw material
 Shift to the right if increase if
scarcity- shift to the left
3. Number of Firms on Market
4. Technology
 Increase output rightward shift
 Obsolete technology- leftward shift
5. Process Goods
6. Tax and Subsidy- tax increase supply
decrease; subsidy increase supply increase
tax decrease supply increase, subsidy
decrease supply decrease
7. Price Expectation
Market equilibrium
 Kung saan nag meet dun equal
Shortage
 Demand increase; supply decrease
Surplus
 Supply increase; demand decrease
Elastic
  Luxury
 Elasticity coefficient is greater than 1.

Q
Inelastic
 Basic needs
 Elasticity coefficient is less than 1.

Unitary
 Change in quantity demanded is equal to
the change in price.