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BASIC CONCEPTS OF
ECONOMICS

Presented by
HARSHITHAS.S
PRE-TEST

 Economics comes from the Greek word oikonomia which means

household chores
 Economics is considered a field of social science
 Economics is relevant because it is part of everybody’s life
 There are three (3) divisions of Economics
• The microeconomics
• The macroeconomics
• The home economics.
 As a science, Economics is related to other sciences.

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 Economics as defined

From the Greek words Oikos meaning household

and nomos meaning management
= Household management

ECONOMICS

The wise production and use of wealth to

meet the demands or needs of the people

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 Economics as defined by authors of Economics
books
 Paul Samuelson (Economics)
“the study of how people and society end up choosing, with or without use
of money, to employ scarce resources that could have alternative uses to
produce various commodities among various persons and groups in society.”

 Roger Le Roy Miller (Economics, Today and Tomorrow)

“Economics concerns situations in which choices must be made about how
to use limited resources, when to use them and for what purposes.
Resources can be defined as the things people use to make the commodities
they want.”

 Hall and Loeberman (Macroeconomics: Principles and Applications)

“The study of choice under the condition of scarcity”

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 Bernardo Villegas (Guide to Economics for Filipinos)
“A social science that studies and seeks to allocate scarce
human and non-human resources among alternatives in
order to satisfy unlimited human wants and desires.”

 Gerardo Sicat (Economics)

“a scientific study which deals with how individuals and society make
choices,”
Conclusion
ECONOMICS – is a social science that deals with how people organize
themselves in order to allocate scarce resources in order to produce goods
and services that will satisfy the unlimited and multiplying wants and needs
of man.

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Common words among definitions…

 Scarcity- a situation wherein the amount of something available

is insufficient to satisfy the desire for it.

 Resources-The labor, capital, land and natural resources and

entrepreneurship that are used to produce goods and services.

 Unlimited – without limits, infinite

 Wants –desires

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 Concerns of Economics
 Economics is concerned with PRODUCTION

 Production is the use of inputs to produce outputs

 Inputs are commodities or services that are used to produce goods and
services
 Outputs are the different goods and services which come out of
production process.

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 Economics is concerned with DISTRIBUTION
Distribution is the allocation of the total product among members
of society. It is related to the problem of for whom goods and
services are to be produced.

 Economics is concerned with CONSUMPTION

Consumption is the use of a good or service. Consumption is the
ultimate end of economic activity. When there is no consumption,
there will be no need for production and distribution.
 Economics deals with PUBLIC FINANCE
Public Finance is concerned with government expenditures and
revenues. Economics studies how the government raises money
through taxation and borrowing.
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 DIVISIONS OF ECONOMICS

ECONOMICS

MICROECONOMICS MACROECONOMICS

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Types of Economics
1. Household Economics – most common use of economics is for the
family. At this level, anyone who knows the economic principles will
be able to improve the running of the household.
2. Business Economics – when a person or group of persons begins to
work, they come under the system of business economics in their
workplace. In this type, you deal with the rent, salary, profits and
others.
3. National Economics – Economic factors of problems affecting the
whole nation. Deals with the management of income,
expenditures, wealth or resources of a nation.
4. International Economics – The highest stage of economic activities
involving the business of one country with other countries like trade,
tourism, exchange rates.
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 Economics as a Science

 Is a science because it is an organized body of truth, coordinated, arranged and

systematized with reference to certain general laws and principles.
 Observation, Formulation of theories, Gathering of data, Experimentation,
Conclusion, Generalization
 Economic analysis seeks to explain economic events using some kind of logic
based on a set of systematic relations.
 It is a social science because the subject matter of economics is people or
societies and their behavior, unpredictable in nature.

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Relations of Economics to other Sciences

MATHEMATICS

POLITICS NATURAL
SCIENCE

ECONOMICS
ETHICS/
SOCIOLOGY
RELIGION

HISTORY GEOGRAPHY

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 Essence of Studying Economics
 To understand the world better
Applying the tools of economics can help you understand
global and cataclysmic events such as wars, famines,
epidemics, and depressions. Economics has the power to help
us understand these phenomena because they result from the
choices we make under the condition of scarcity.
 To gain self-confidence and become wise decisions makers
Mastery of economics will help you to understand how things
work in your society thereby “feeling equipped”

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 To achieve social change and contribute to National Development
Economics can help us understand the origins of serious social
problems such as: unemployment, hunger, poverty, disease,
child abuse, drug addiction, violent crime. It will also explain
why previous efforts to solve these problems have failed, and
help us to design new, more effective solutions.

 To help prepare for other careers

Economics has long been a popular college major for
individuals who are intending to work in business. But it has
also been popular among those planning careers in politics,
international relations, law, medicines, engineering, etc. This
is for good reason because practitioners in each of these fields
often find themselves confronting economic issues.

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Developments of Economics
HUNTING AND FISHING

PASTORAL STAGE

AGRICULTURAL STAGE

HANDICRAFT STAGE

INDUSTRIAL STAGE
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 ROWTOW’S 5 STAGES OF ECONOMIC DEVELOPMENT
AGE OF
HIGH
D
R
MASS
I
P
V C
R T E O
E A
C TO
N
T O K S
R N E M U
A D
D I O A M
F T
I T
U
P
T I
O
F R T
I
O N I I
N T O
A TO Y
L TAKEOFF N

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