PACIFIC SOUTHBAY COLLEGE, INC.

Purok Carmenville, Calumpang, General Santos City

 

RESOURCE UTILIZATION
Learning Objectives:
At the end of the chapter, students will be able to:
 Define Economics
 Concerns of Economics
 Opportunity Costs
 Production Possibilities Curve (PPC)
 Full Employment and Full Production
 Economic Efficiency
 Economic Growth

-ECONOMICS. Has been discussed and described by scholars in number of

satisfying ways:
    - studies the effect allocation of the scarce means of production toward the
satisfaction of human wants (Slavin)
- a social science concerned with using scarce resources to obtain maximum
satisfaction (Walstad and Bingham, 1993)
- the study of how societies use scarce resources to produce valuable
commodities and distribute them among different people(Samuelson and
Norhaus,1992)
-the study of production, distribution, selling, and use of goods and
services(Collin,1997)
- the study of how people use their limited resources to satisfy unlimited
wants(Parkin and Bade,1991)
- is the study of how society uses its scarce resources to satisfy unlimited
wants and needs.

 According to The Economist website, the most concise definition of

economics is: the study of how society uses scarce resources, defined by
Thomas Carlyle, a 19th century Scottish philosopher and  writer.
 Hence, ECONOMICS lay emphasis on the need to take full advantage of our
material output given an amount of resources . The crucial truth however,
these resources are only limited suffering from scarcity—imbalance
between human needs and wants and the means of satisfying those,
considering this as the central economic problem.
 Human desires are never ending whether it is a need or want, especially 
now where different innovations has been taking the spot of everyone’s 
attention. Nobody could deny the fact that the world is on fast pacing
regime due to the advent of new technologies. The primary problem is,
 there are never ever enough resources to produce all the goods and
services that people want. This is where economics plays its role.
 An economy relates the study of human action and how people should
make choices. It is a system for organizing the allocation of resources to
produce and distribute the goods and services to satisfy human wants. The
more proficient and flexible the economy is, the more wants we can satisfy.
> CONCERNS OF ECONOMICS
          Since economics emphasize on maximizing the scarce resources it
concerns production, distribution and consumption of goods and services.
This is vital because once resources have improperly managed, people had
lost their opportunity to enjoy one’s benefit. In a market economy, each of
these resources is traded in exchange for a type of income. We sell these
resources to make income with the very purpose of satisfying our wants.

 PRODUCTION
-is the creation or addition of utility—total satisfaction received from
consuming  a good or service/s. In order to create production there must
be usage of economic resources. Economic resources are the goods or
services available to produce valuable end user products, also called
FACTORS OF PRODUCTION.
* Land.  In economic term, is not just the mere land we thought it was. It
includes natural resources such as minerals, oil, coal, soil, water and the
ground in which these resources are found.  This is used in economy
through extraction (mining), and agriculture. It also provides site for
factories, office, hospitals, schools, universities, homes, etc. Moreover,
owners of land receive rentals through leasing of their properties.
Economic rent is money received from something that is given by nature,
rather than produced by human effort.   
*Labor. Is the work, time  and human effort included in the production. For
instance a manufacturing plant would hire their own production team as
well as staff s and supervisors, etc. so  that they  could generate revenue
through processing raw materials to finished products. These people are
being paid for their work rendered via wages and/or salaries.
*Wage. Is a compensation based on the number of hours worked multiplied
by an hourly rate of pay.  A factory worker might work 40 hours during the
work week and has a rate pay of php 37 per hour. Thus, he will receive a
paycheck showing gross wages of php 1,480(40xPhp37).
*Salary. However, is compensation quoted on a monthly or annual basis.
The manager of the factory might earn a salary of Php420,000per year.  If
the manager is paid semi-monthly his paycheck will show gross salary of
Php 17,500 for the half-month.
*Capital. In layman’s term, is the money used by entrepreneurs to run their
business. However, in Economics, it is defined as- human-made\\ goods
used to produce other goods or services. A productive asset such as office
buildings, stores, factories, equipment, and software that unlike the natural
 resources is man-made and employed to generate income. The income
owners of capital receive what is called interest. The purchase of new
capital software is financed through loans, so the lender earns interest
from its productivity.

 ENTREPRENEURIAL ABILITY. Is the effort to organize the production

process. The entrepreneurs are the people who are responsible in
combining the three other economic resources. They occupy a central
position in the economy because they are the one who stimulates all
economic activity  to earn profit.
 DISTRIBUTION. Is the allocation of the total product (money incomes)
among factors of production. In general theory, each unit of output
corresponds to a unit of income.
Basically, the outcome of this economic activity would be:
 Land – Rent
 Labor- Wages
 Capital-Interest
 Entrepreneurship- Profit
           The idea of DISTRIBUTION is concerned with the assessment of
the services of the factors of production. In this sense, the theory of
distribution is most likely could be understood as a theory of value. We
determine the prices not of the factors of production but of their
services. 
-For instance, it is not the size of the land which is traded, but rather the
services it culd offer. Thus, rent is not the price of the land but the value
of service or use of land; wages/salaries, the value of the service of
labor; interest, the value of the use of capital, and profit, the return of
entrepreneur’s services.

 CONSUMPTION. Is the utilization of a good or a service for one’s very own

satisfaction. Without it, there would be no need for production and
distribution since the goal of economics is to suffice the consumer wants
and needs. It deals with the concept of destroying utility.
For instance, when a student has eaten his packed lunch, he has changed
the form of the product (food).In economic sense, he has destroyed its
utility by eating it, thus the food he has been consumed. However, not all
destruction of utility implies consumption. When a house was destroyed
due to negligence, it is not consumed economically because one’s
satisfaction was not sufficed. Thus, the emphasis of consumption is the
satisfaction of human wants rather on the destruction of utility.
 OPPORTUNITY COSTS. Our economic drawback is that we merely have
limited resources to satisfy relatively unlimited wants. There are never
enough resources to suffice everything that everyone wants. Therefore,
 humans must make a choice. Opportunity cost is the foregone value of the
next best alternative – the value of things we give up. 
It is illustrated in this manner. If we prefer to hang out with our friends over
staying at home
to study, the opportunity cost would be the value of the benefit we might
get for studying at home. We weigh the costs and benefits of various
options, including opportunity costs though sometimes, this cost cannot
be expressed in terms of money.
Economists assume that we pick the choice we find more of value. In the
economic world, both is not applicable because we only have limited
resources, as so as with time. Whichever option is chosen, you will miss
the value of the other options.
 PRODUCTION POSSIBILITIES CURVE. Is a curve that illustrates the
production possibilities for the economy. A production possibilities curve
represents the frontier of the economy’s production abilities. As a frontier,
it is the maximum production possible given obtainable resources and
technology. 

Note: You can read/browse other material sources of this economic concept.
Better still research to this recommended economic book:
 MICROECONOMICS- Theories & Applications
By: Danilo F. Marcelo Jr.
Copyright-2016 by: Unlimited Books Library Services, Inc.

Exercise no.03 
Briefly discuss/elaborate (in your own understanding) the following:
1. What is the significance of working and/or seeking for a job?
2. Elaborate the adage: “Human beings always craving for something even not
necessary”.
3. Compare and contrast ‘NEEDS from WANTS”.

Good luck guys!