Instructional Module: Republic of The Philippines Nueva Vizcaya State University Bayombong, Nueva Vizcaya

Republic of the Philippines
NUEVA VIZCAYA STATE UNIVERSITY

Bayombong, Nueva Vizcaya
INSTRUCTIONAL MODULE
IM No.: Basic Microeconomics 2nd Semester-2020-2021
College College: _BUSINESS EDUCATION

Logo Campus :_Bayombong_
DEGREE COURSE NO. ECO 1

PROGRAM
SPECIALIZATION COURSE Basic Microeconomics
TITLE
YEAR LEVEL TIME FRAME 6hrs WK NO. IM
NO.
I. UNIT TITLE/CHAPTER TITLE
INTRODUCTION
II. LESSON TITLE
Introduction to Economics
III. LESSON OVERVIEW
Introduction to Economics, definition of economics, branches of economics, human wants, goods,

resources, the economic problems, and economic system.
IV. DESIRED LEARNING OUTCOMES
The student should be able to define the basic economic terms, economic activity, basic economic
problems, methodology in economics, and the construction of economic theory
and relate the nature of economics to real life situation.
V. LESSON CONTENT
INTRODUCTION
It is a social science
that deals with the allocation
of scarce resources
to satisfy unlimited
human wants.
Definition of Economics
 Economics is concerned with humanity’s well-being or welfare. It encompasses the social relationships or social
organizations involved in allocating scarce resources among alternative human wants and in using those resources
toward the end of satisfying wants as fully as possible. – Richard Leftwich
 Economics is the study of how people make their living, how they acquire the food, shelter, clothing and other
material necessities and comfort of this world. It is a study of the problems they encounter and of the ways in
which these problems can be reduced. – Paul Wonnacott and Ronald Wonnacott
“In accordance with Section 185, Fair Use of Copyrighted Work of Republic Act 8293, the copyrighted works included in this material may be reproduced for educational
purposes only and not for commercial distribution,”
NVSU-FR-ICD-05-00 (081220) Page 1 of _7_
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Prepared by Gayon Pinkihan Sarmiento, Ag Economics UPLB.
 Economics is a scientific study which deals with how individuals and society generally make choices. Individuals
and groups in society have innumerable wants. To satisfy those wants, there are resources that can be used. These
resources, however, are not freely available. They are scarce and furthermore have other alternative uses.
Dimensions of choice includes present and future use of available resources. Moreover, the uses of these
resources carry with them costs and corresponding benefits. Concerns with costs and benefits require efficiency in
resource use. - Gerardo Sicat.
Origin of the word Ëconomics

 Oikonomia
– Greek word that means

“household management”
Two Main Branches

 Microeconomics
- studies behavior of individual economic units
- households, firms, markets
 Macroeconomics
- Focus is on the whole/aggregate economy
- E.g., GNP, GDP, inflation, unemployment
Human wants
 Human wants are the goods and services needed by human beings.
 Goods and services are those that yield satisfaction. It may be tangible (i.e. shoes, dress, pencil, food) or
intangible (i.e. haircut, foot spa, dental care).
Classification of Goods
1. Consumer goods vs capital goods
Consumer goods – those that yield direct satisfaction. Example: when we eat hamburger, we get
immediate satisfaction, hence hamburger is a consumer good.
Capital goods – those that are used in the production of other goods (and services). Example: the frying
pan used in the preparation of the hamburger does not give a direct satisfaction (instead an indirect satisfaction
because without which, the hamburger cannot be prepared.)
2. Essential goods vs Luxury goods
Essential goods – these are the basic needs of man

Luxury goods – these are those that contribute to man’s comfort and well-being.
Characteristics of wants
 Unlimited
 Varied
 Insatiable (over an aggregate period of time)
 Origin of wants
____________________________________________________________________
 Survival. People want food, clothing and shelter because these things are needed to survive
 Dictated by culture. The desire to have appliances such as television, refrigerators, and gas stoves are
dictated by culture where one lives.
 Generated by activities necessary to satisfy other wants. The desire to complete college education is not
because one really wishes to spend and sacrifice in coming to school but this activity is needed because it
is essential to satisfy the ultimate desire of getting a better job in the future.
Resources
 Resources refer to the factors or inputs of production. They are those which are needed to produce goods and
services. These include:
1. Economic resources. These are those with price tag because they are scarce.
2. Free resources. These are those that has no price (because they are abundant).
 Classification of Resources
1. Land. This pertains to the natural resources, not man-made. It includes everything found on or under
land, including mountains, bodies of waters (like rivers, lakes, oceans), minerals, air, and sunlight.
2. Labor. It consists of labor power or the capacity for human being, both physically and mentally, used
in producing goods and services. This applies not only to workers, farmers, or laborers but also to professinals
like accountants, economists, or scientists.
3. Capital. It is anything that is used to produce other goods and services.
4. Entrepreneurship. It is the ability to organize and coordinate land, labor, and capital.
 Characteristics of Resources
1. Limited or scarce
2. Versatile
3. Can be combined in varying proportion to produce goods and services
Positive vs Normative Economics

 Positive Economics
 Answers the question: “What is?”
 The price of gasoline is Php 42.90/liter.
 The population growth rate is 2.3%.
 11 million Filipinos live on $1 a day.
 Normative Economics
 Answers the question: “What should be?”
 The price of gasoline should be Php 40.0/liter.
 The population growth rate must only be at 2 %.
 Filipinos ought to live on at least $5 a day.
____________________________________________________________________
THE ECONOMIC PROBLEMS

How would you choose to use or allocate…
• 6 hours to study for Math, English and Econ exams?
• Php 100 of your daily allowance?
• 5 hectares of agricultural land?
• Php 50 million of CDF if you were the Governor of your province?
• Php 1 trillion budget for the Filipino people?
Scarcity of resources: Economic Problem Problem of Choice
The Basic Economic Questions
 What to produce?
 How much to produce?
 How to produce?
 For whom to produce?
(a) What to produce?
- Do we produce everything in this country? If not, which goods will we produce here and which goods
will we import?
(b) How much to produce?
- Once we have decided what goods to produce, next question: How much of each good will we produce?
(c) How to produce?
- Suppose we have decided on quantities of goods that will be produced. next question: what techniques
to use in production?
(d) For whom to produce?
- Who benefits from the goods that were produced?
Economic System
 A system is a structure. So an economic system is the economic structure of a given economy.
Economic Systems &

The Basic Economic Questions
2 extreme economic systems
• complete command economy
 decisions made by “authorities”

• completely unregulated market economy
 market is the institution that determines the answers.
____________________________________________________________________
* actual economies fall somewhere in between

The Tools of Economics
 Economic theories are used to explain the nature of economic activity and to predict what will happen to the
economy. The tools used in making these explanations and predictions include:
1. Logic. It pertains to reasoning and drawing of conclusion.
2. Mathematics. It means conceptualizing and quantifying economic principles.
3. Statistics. It means describing behaviors quantitatively and testing hypothesis in making inferences.
VI. LEARNING ACTIVITIES
VII. ASSIGNMENT
REVIEWING KEY TERMS: Define/explain each term below.

1. Economic system
2. Consumer sovereignty
3. Private property
4. Profit motive
5. Command economy
REVIEWING THE FACTS:

1. Describe the main strengths and weaknesses of a traditional economy
2. List five major weaknesses of the command economy
3. Explain how consumers influence a market economy
4. Describe how a market economy, a traditional economy, and a command economy adapt to change.
5. State how people and businesses benefit from economic freedom.
CRITICAL THINKING
1. Checking Consistency. Some people believe the profit motive conflicts with the goal of economic security and
equity. Do you agree or disagree? Why or why not?
2. Determining Consistency. How can the movement of people and the communication of ideas affect the type of
economic system a society has?
APPLYING ECONOMIC CONCEPTS
1. Tradition. Most people tip for services in restaurants, but not for service at clothing stores or gas station, of
comfort rooms. Explain how this illustrates economic behavior by tradition rather than by marker or command.
2. Freedom and equity. Explain the role you as a consumer must play in obtaining economic equity for yourself.
3. Economic incentives. What incentive does owning private property give people?
VIII. EVALUATION (Note: Not to be included in the student’s copy of the IM)
IX. REFERENCES
Tirso B. Paris Lecture Guide. UPLB
____________________________________________________________________
Numbering the IM No.: IM-CCCCCC-SSSSSS-NNNN-NNNN
School Year
Semester
Course Number
e.g.:
IM-COURSE NO-SEMESTER-SCHOOL YEAR
IM-MCB180-1STSEM-2020-2021
____________________________________________________________________

Instructional Module: Republic of The Philippines Nueva Vizcaya State University Bayombong, Nueva Vizcaya

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Republic of the Philippines

NUEVA VIZCAYA STATE UNIVERSITY

College College: _BUSINESS EDUCATION

DEGREE COURSE NO. ECO 1

I. UNIT TITLE/CHAPTER TITLE

II. LESSON TITLE

III. LESSON OVERVIEW

Introduction to Economics, definition of economics, branches of economics, human wants, goods,

IV. DESIRED LEARNING OUTCOMES

Origin of the word Ëconomics

– Greek word that means

Two Main Branches

Essential goods – these are the basic needs of man

Positive vs Normative Economics

THE ECONOMIC PROBLEMS

Economic Systems &

 decisions made by “authorities”

 market is the institution that determines the answers.

* actual economies fall somewhere in between

VI. LEARNING ACTIVITIES

REVIEWING KEY TERMS: Define/explain each term below.

REVIEWING THE FACTS:

Numbering the IM No.: IM-CCCCCC-SSSSSS-NNNN-NNNN

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