Name: THALIA AMOR M.

IMPERIAL
Course, Year and Sec: BSBA 2-1

BAC 102 – MICROECONOMICS

Assignment No. 3

What is the Big Idea?

Directions: In the light bulb, write down your thoughts about economic theory and then make your own summary about
the topic and have it discussed in the box.
My own summary
Figure 2 about the topic that
have been discussed
 Theories that have been developed for the economy have been
one of the reasons to have well-functioned flow of economy. Asides
My thoughts from these theories, economists also created economic models for easier
about economic understanding and interpretation for those variables they want to express
theory and emphasize. Through these models, we can simply notice the
relationships between variables because of possible disturbances may
enter in the flow of economy. The Production Possibilities Frontier
model is an example of economic model that shows the combination of
output, the economy can possibly produce given the available factors of
production and the available production technology.
Economic theory brings significant impact as it reveals all the
economic activities that may predict some changes that may occur to the
flow.
There are two important theories that we have studied which are;
The Malthusian Theory of Population that points out the rapid grow of
Through studying some of the economic theories this are
population my causes
that thoughts that I formulated:
shortage on the production of food; and
1. In The Malthusian Theory of Population
Innovation Theory that emphasizes the Malthus
that was developed by Thomas Robert role of which states that the
the innovators or
population grows at a geometric progression while food production
entrepreneurs grows at an
on the economic arithmetic
success progression.
of their businesses.From this, we
can conclude that populations will grow faster than the supply of food. This exponential population growth will lead to a
shortage of food. He also theorized that this correction would take place in the form of Positive such as having natural
disasters such as floods and earthquakes. Through this, Malthus believe that natural forces would correct the imbalance
between food supply and population growth and Preventative Checks family planning, late marriages and others.
Malthus believe that it will also correct the imbalance. When we look at the situation we are facing right now, because of
corona virus many people die. We can categorize this a positive check since from the beginning of the year until now
population decreases, and may possibly bring balance state on supply of foodstuffs to population ratio. On the other
hand, for me Malthus are wrong on the part which he says that late marriages can also correct the imbalance because it is
not already accepted in the community especially for those who encounters early menopausal. As a result, they never
have the chance to create their own family so others marry before they turn thirty years old.
2. Innovation Theory that was developed by Joseph Schumpeter who placed emphasis on the role of the innovator
or the entrepreneur in economic development. He pointed out that the economic success of every firm is because of the
innovator or entrepreneur. Through this, many entrepreneurs are encouraged for their owned businesses. He also coined
the term "creative destruction," made entrepreneurs and bankers the heroes of the economic development story, and
believed that nations could make their own destinies.