ECONOMICS Scarcity as a source of economic problem

The limitation of resources to meet the expanding human

 a social science that deals with the study of allocation of wants
scarce resources to answer the unlimited human wants. Scarcity vs. Shortage
 Comes from the Greek word “oikonomia” meaning Scarcity- is a naturally occurring limitation on the
household management resource that cannot be replenished.
Shortage- a condition when the supply of a good,
Adam Smith- Father of Modern Economics service or resources is not enough to meet the demand
Laissez Faire- “Hands off”
Allocation and the act of economizing
 It minimizes the role of the government in
 Division of resources to satisfy human wants
interventions/taxes in business or market.
and needs
 associated with economic efficiency and
Economics as a social science
maximization of utility.
 Utilizes the scientific method of inquiry
 Systematic method of inquiry
Opportunity Cost- choosing one good or service over
 Study on how society creates its material wealth
another. This is the item you give up.
 Interrelated on other social sciences
 the value of something that is lost because you
choose an alternative course of action.
Basic economis problems in 21st century
Absolute Value- the product you chose because it can
 21st century is the current century of the common era.
produce more products.
 Refers to a certain core competencies such as
Comparative Advantage- a country has a comparative
collaboration, digital literacy, critical thinking and problem-
advantage in producing a good if it has a lower opportunity
solving.
cost of producing that good compared to whatever else it
 Critical thinking, communication, collaboration and
could produce with its resources. (comparing two or more
creativity.
products)
Poverty/inequality
Scarcity
Unemployment
Scarcity

Resources and the study of economics

 Wealth creation and wealth utilization
 Defined as products of nature, qualities of
individuals, man-made things which are used in producing
goods and services
 Kinds of Resources:
Natural resources
Human resources
Physical resources

Applied economics- the application of economic

theories and models in real life. It consists of learning how
choices affect the individual decision making.

Human wants/ needs and economic analysis

Needs- basic necessities
Wants- can be describe as differentiated or expanded
*Because of expansion and multiplication of human
wants we are experiencing economic problem
Factors of Production
Factors:
Land= rent
Taste
Labor= wages
Income
Capital= interest
Environment
Entrepreneur= profit
Socioeconomic status
Microeconomics
 The branch of economics that examines the
individual or company level.
 It deals with the households and firms, such as the
buying behavior of consumers and profit-
maximizing behavior of sellers.
Microeconomic Concepts
Utility
refers to the value or satisfaction derived from the
consumption of a goods.
Marginal Utility
The additional utility or satisfaction from the consumption
of an additional unit of good, keeping other things
constant.
Law of Diminishing Marginal Utility
is a law of economics stating that as a person increases
consumption of a product while keeping consumption of
other products constant, there is a decline in the marginal
utility that person derives from consuming each additional
unit of that product.
Kinds of Personal Income
Gross Income- the total amount receive by a person.
Disposable Income- take home money after all of your
deductions. (taxes, employment insurance, pension plan)
Discretionary Income- income that is left after
necessities have been paid for (groceries, clothing,
computer, gifts)
Macroeconomics
 is a branch of the economics field that studies how
the aggregate economy behaves.
 variety of economy-wide phenomena is thoroughly
examined such as, inflation, price levels, rate of
growth, national income, gross domestic product
and changes in unemployment.
Gross Domestic Product (GDP)= gawa sa ibang
bansa tapos dito binibenta
 is the total value and services produced during a
given period within the geographic boundaries
 
of a country regardless of by whom. The
goods and services are produced domestically
 GDP is commonly used as an indicator of the
economic health of a country, as well as a gauge
of a country's standard of living.
Nominal GDP
Value of the goods is expressed in current prices
Real GDP
Adjusted for inflation.

Gross National Product (GNP)=gawang pinoy

Is the total value of final goods and services produced
during a given period by the citizens of a country no
matter where they live. The goods and services are
produced by the “nationals” of the country

Gross National Income (GNI)

 The sum of a nation’s gross domestic
product plus net primary income received from
overseas.
 Defined as the sum of value added by all
producers who are residents in a nation. GNI
measures income received by a country both
domestically and from overseas.
GNI= GDP + Net primary income

National income
is the total value a country’s final output of all new goods
and services produced in one year.

Inflation
Refers to the persistent increase/rise in price levels of
goods and services.

 Deflation- extreme decreasing inflation rate

 Hyperinflation- extreme case of inflation
where the inflation rate increases above 100%

Purchasing Power of Peso

is the number and quality or value of goods and services
that can be purchased with a unit of currency.