ECC 122

MICROECONOMICS

PROF. ARA PONTILAR

STEVE MENDOZA BSENTREP 1A

Exercise/ Drill
Write a narration of your daily routine where economics is used in your daily students’ lives.

Economics is always everywhere. Our life is composed of interchanging needs and

wants. We always seeking a better life to live. In my life as being one of the student’s, I could
say that I always practiced the word “economics”. Before I will tell you my life’s journey where I
used the economics, I will define first its meaning.
Based on the www.investopedia.com, Economics is a social science concerned with the
production, distribution, and consumption of goods and services. It studies how individuals,
businesses, governments, and nations make choices about how to allocate resources.

I started my day by waking up early in the morning. By simply preparing our breakfast
such as coffee or milk, rice, and viands. The economics is always everywhere if there is involved
a products or services. I could say that by simply making our breakfast I do practiced the
essence of economics by using the available resources smartly, efficiently, and effectively. After
that, I wash ur dishes by minimizing the dish washing soap and water in order we can save few
amounts pesos. As well in taking a bath, I always remind my younger cousin to avoid wasting
water in unimportant things because we are in the sufferings of pandemic. Next, in preparing
our lunch I just reheat some foods from the breakfast in order we can have that as our lunch.
When it comes to the electricity, I usually limit the time in watching television by my cousin. As
the eve comes, I cook rice that suited only to three of us. I don’t cook too much to lessens
spoiled foods. I do believe that all the activities that I had are the best way to minimize our
consumption in day-to-day living. By applying my learnings in past years in studying economics.
I had learned before that we need to use the available resources smartly, effectively, and
efficiently. It is helpful specially in this time of crisis where all people are sufferings from pains
and hunger.

In short, by using our available resources cleverly is the best way where I applied my
learnings from my studies in previous years about economics. It is very great specifically during
this time where almost all are in anguishes due to the strike of COVID-19 virus. We should value
everything and expand our learning on how to use it cunningly.
Evaluation
Define the following terms
1. Economics
Online definition: Economics is the social science that studies how people
interact with value; in particular, the production, distribution, and
consumption of goods and services. Economics focuses on the behaviour
and interactions of economic agents and how economies work. 
it is a social science that deals with the production, distribution, and
consumption of goods and services.

My own definition: It refers to the study on how a certain community uses

its limited resources. By studying they can provide answers on how to
response to the gap.

2. Microeconomics
Online definition: Microeconomics is a branch of economics that studies
the behavior of individuals and firms in making decisions regarding the
allocation of scarce resources and the interactions among these individuals
and firms.

My own definition: it is the study of a specific area/ part of an economy

such as particular markets, and segments of the economy.

3. Macroeconomics
Online definition:  is a branch of economics dealing with the performance,
structure, behavior, and decision-making of an economy. For example,
using interest rates, taxes, and government spending to regulate an
economy’s growth and stability. This includes regional, national, and global
economies.

My own definition: Macroeconomics is the study of the universality of an

economy such as aggregate demand, national output, and inflation.
4. Scarcity
Online definition: refers to the basic economic problem, the gap between
limited – that is, scarce – resources and theoretically limitless wants. This
situation requires people to make decisions about how to allocate
resources efficiently, to satisfy basic needs and as many additional wants as
possible

My own definition: it refers to the shortage of supply that results to not

meeting the demands of the market.

5. Opportunity cost
Online definition: opportunity cost is the loss or the benefit that could have
been enjoyed if the best alternative was chosen. As a representation of the
relationship between scarcity and choice, the objective of opportunity cost
is to ensure efficient use of scarce resources.

My own definition: the opportunity costs is referring to the any loss or gain
of potential other alternatives when one alternative is chosen. In other
words, we need so sacrifice something to attain other things.
Essay

1. Illustrate the circular flow of economy.

The circular flow of an economy its just like the cycle of life in this world.
Wherein we need to value every hour that we had because our time is limited
only. I could relate the circular flow model wherein our parents take care of us
until we have our own job. The time passed by, when our parents get old, we
need to give back their hardships, we will provide them foods, shelter as what
they did to us during younger ages.
The circular flow model demonstrates how money moves through society.
Money flows from producers to workers as wages and flows back to producers
as payment for products. In short, an economy is an endless circular flow of
money. It simply shows that, we as human beings in this arena of life has
different purposes but we are connected to one another based on our needs,
wants, demands, and role in society. If a sector in the circular flow model will not
participate, the market will not completely work. Its just like in real life we are not
existing without our parents.
In conclusion, the circular flow shows that everyone should help one
another. We should have unity behind our diversity. We should embrace
understanding and keep a better relationship with one another to avoid conflict.
By that, we can create a better place with great flow of economy.
 2. Give two countries for each economic system and feature those country’s
economic status.
The two countries that I had featuring in this essay are Canada and Australia. I am very
interested to feature this because the mentioned countries are listed to the progressive
nations. First, I will define both lands Canada is a country in the northern part of North America.
Its ten provinces and three territories extend from the Atlantic to the Pacific and northward
into the Arctic Ocean, covering 9.98 million square kilometers, making it the world's second-
largest country by total area.
While the Australia is a sovereign country comprising the mainland of the Australian
continent, the island of Tasmania, and numerous smaller islands. It is the largest country in
Oceania and the world's sixth-largest country by total area.
At this point, I will feature the country’s economic system I will start with Canada is a
highly developed market economy. It is the 9th largest GDP by nominal and 15th largest GDP by
PPP in the world. As with other developed nations, the country's economy is dominated by
the service industry which employs about three quarters of Canadians. When it comes to
Australia, it has a mixed economic system in which the economy includes a variety of private
freedom, combined with centralized economic planning and government regulation. Australia is
a member of Asian Pacific Economic Cooperation (APEC) and the Trans-Pacific Partnership
(TPP).
Moreover, the economic status of two mentioned countries will be discussed in this
part. The Canada’s real GDP is forecast to post growth of 5.3 per cent in 2021 and 3.5 per cent
in 2022. This follows the deepest recession in modern times. We estimate that economic
activity dropped by 5.3 per cent in 2020. When it comes to Australia, its GDP was estimated at
A$1.3 trillion as of 2020. The Australian economy is dominated by its service sector, comprising
62.7% of the GDP and employing 78.8% of the labor force.
In conclusion, both countries are progressive even though their style in governing their
market. They made it progressive because of their efforts and unity with one another.
Credit to this links:
https://www.conferenceboard.ca/focus-areas/canadian-economics/canadian-outlook
retrieved: March 29, 2021
https://globaledge.msu.edu/countries/australia/memo retrieved: March 29, 2021
https://en.wikipedia.org retrieved: March 29, 2021
3. Name an economist that different economic eras and explain how they made impact to
the economic thoughts.

 BIRTH OF ECONOMIC THEORY: CLASSICAL ECONOMICS

Adam Smith
- He is considered as one of the most important persons in the
antiquity of economics. He also known as the “father of
economics”. He published a book, Wealth of the Nations,
published in 1776, became known as “the bible of economics” for
a hundred years. One of his major contributions in the field of
economics is all about his analysis of the relationship between
consumers and producers through demand and supply, which
ultimately explains how the market works through the invisible
hand. In moderns time, he is very popular as "the father of
modern economics".
- In simple thought, through his shared knowledge about his
studies he come up with the relationship between consumers and
producers through demand and supply which helps markets to
determine the problems and how to provide its solution
effectively and efficiently.

John Stuart Mill & David Ricardo

- Their idea wants to convey that due to their knowledge
contributed to the world of economics, it helps the Nation to
manage their economy to have a progressive and product
country.
- They are both English political economist who developed the
basic analysis of the political economy or the importance of the
state’s role in the national economy. The term political economy
is an older English term that applies management to an entire
Polis (state).

Karl Marx
- Through his ideas, it is easy to an entity to decide if how much
does the item costs based on its working labor to manufacture a
certain product.
 - He is a philosopher and sociologist also emerge from this period.
He was greatly influenced by the conditions brought about by the
industrial revolution upon the working classes. This major work,
das Kapital, is the center piece from which major socialists’
thoughts were developed.
- believed in the labor theory of value to explain relative differences
in market prices. This theory stated that the value of a
produced economic good can be measured objectively by the
average number of labor-hours required to produce it.

 NEOCLASSICAL ECONOMICS 1870s

Leon Walaras
- is regarded as the most influential economist of the period
because of this book Principles in Economics. He emphasized that
the price and output of a good are determined by supply and
demand, which act like “blades of the scissors” in determining
price or what we called marginal utility.
- Marginal utility refers to the additional satisfaction or benefit
that a consumer derives from buying an additional unit of a
commodity or service. It implies that the benefit to a consumer of
an additional unit of a product is inversely related to the number
of units of that product s/he already owns.

Alfred Marshall
- He became popular in his idea about Marginalism.
- Marginalism is a theory of economics that attempts to explain the
discrepancy in the value of goods and services by reference to
their secondary, or marginal, utility.

 KEYNES GENERAL THEORY OF EMPLOYMENT, INTEREST, AND MONEY

John Maynard Keynes
- He is an English economist who offered an exclamation of mass
unemployment and suggestions for government policy to cure
unemployment in his influential book. The general theory of
employment, interest, and money (1936).
- His idea wants to convey that the government should manipulate
the problem in unemployment to avoid worldwide interwar
depression. By that, the country can maintain their stability in
handling their economy through businesses, employment,
interest, and money.
 NON-WALRASIAN ECONOMICS (1939)
John Hicks
- He is famous with his study about IS-LM. IS (investment – saving)
and LM (Demand for, and supply for money). The IS-LM model
attempts to explain a way to keep the economy in balance
through an equilibrium of money supply versus interest rates.

 POST-KEYNESIAN ECONOMICS (1940 and 1950s)

Paul A. Samuelson, Kenneth J. Arrow, James Tobin and Lawrence Klein
-  Mainstream economics, what it is and what it is not · Markets
exist for all goods and services produced and consumed. As well,
it is the body of knowledge, theories, and models of economics, as
taught by universities worldwide, that are generally accepted by
economists as a basis for discussion.
- It enlightens the mind of an individual about Post-Keynesian
Economics.

Joan Robinsons and Michael Kolechi.

- They invested their knowledge, skills, and ability to empower and
embrace the post-Keynesian economics.

Milton Friedman
- His idea serves as another key to level up the solidity of the post-
Keynesian economics. He argued for free trade, smaller
government, and a slow, steady increase of the money supply in a
growing economy. His emphasis on monetary policy and the
quantity theory of money became known as monetarism.

GOD BLESS
 &
KEEP SAFE