ECONOMICS AS AN APPLIED SCIENCE:

Economics is a study of economic activities of a man. It is only concerned with

the wealth-getting and wealth-using activities of a man. – PROF. MARSHALL

Uncle Sam = United States of America

Adam Smith, Father of Economics. In 1776, he published The Wealth of Nations

1776- Industrial Revolution.

The birth of economics started with hunter gatherers.

Then, agricultural revolution (Stone Age), traditional economy.

Industrial Revolution, many theories about economics exists along with technology and
machines. However, environmental issues exist also like climate change because of
factories.

ECONOMETRICS

 The application of statistical and mathematical theories to economics for the

purpose of:
 Testing hypotheses
 Forecasting future trends

01-25

2 branches of economics

Macroeconomics- overall performance of the entire company/state/country (national

income, debt of the country)

Microeconomics- studied the individual and smallest economic unit that make up an
economy (needs, wants, market, savings, and scarcity)

Basic Economic Problem

Scarcity- shortage, kakapusan, insufficiency of resources

Refers to the tension between limited resources and limited wants and needs

Choice and decision making:

Trade-off is the matter of sacrificing a something for more important matter.

Opportunity Cost

Comparative Advantage- economys abiity to produce particular good or service at lower

Trade off and opportunity cost

 What to produce?

The system must determine the desires of the people

Goods and services must be based on the needs of the consumers

Factors to consider

a. Availability of resources
b. Physical environment
c. Customs and traditions of people

 How to produce?

The sytem must select the proper combination of economic resources in producing the
right amount of output

The quality of output must come first before the quantity.

Capital intensive, machineries

 For whom shall the goods and services be produced?

This has something to do with distribution

Once the goods are produced, how shall they be distributed?

 Are the country’s resources being utilized or some of them are lying idle and
unemployed?
 Is the economy’s capacity to produce goods growing or remaining the same
overtime?

To achieve a growth is productive capacity is a universal objective.

ECONOMIC SYTEMS means trough which society determines the answers to the basic
economic problems mentioned.

1. Traditional,
2. Market , competition
3. Command, government
 4. Mixed

MIDTERMS

02-14

Economic systems, it refers to ways of managing nation’s available resources to answer

the 3 economic questions:

 What to produce?
 How to produce?
 For whom to produce?

Types of economic systems:

1. Free market
 Private ownership, competition, capitalistic economy, no intervention of
government, the production of goods depend to demand
 New Zealand, Singapore, Australia
2. Centralized economy
 heavy involvement of Government, command economy, counterpart of free
market, government decides how to allocate the resources, consider the
resources before producing
3. Mixed economy (Philippines)
 Combination of free market and centralized economy
 US, European countries
4. Traditional economy
 survival economy, no technology, barbaric, foundation, basic
Barter, goods were exchanged for another good, illegal because no tax

MACROECONOMIC GOALS OF A COUNTRY:

Government- central decision maker

1. To know the market failures
2. Economic Growth
3. Business cycle
4. Recession
5. Expansion
6. Depression
7. Full employment
8. Price stability
 Based on your opinion, experience, personal sentiments. do you agree with the
generally positive outlook for the Philippine economy? Why or why not?

In year 2019, before the pandemic, Philippines was one of the fastest growing
economies in the world. However, the economic growth of our country faltered in
year 2020 because of the pandemic. The pandemic handling was problematic; the
government imposed domestic lockdown which affects the economy. But, in year
2021, the Philippine economy expanded more quickly and beats the target GDP or
gross domestic product with 5.6% , as loosened pandemic-related restrictions and
business activities were continued. The Philippine Statistics Authority (PSA) reported
7.7% growth. This figure put the economy on track to return to its pre-pandemic
level this year. With this, I agree with the generally positive outlook for the
Philippine economy. I believe that we will surpass the challenges brought by
pandemic and recover from all the adverse effect of it.

Sources: Nikkei asia and reuters

02-15

21ST SOCIO ECONOMIC CHALLENGES

PHILIPPINE ECONOMIC PERFORMANCE

GLOBALIZATION, way for a country to be not left behind

- It makes the countries interconnected

- Unity, cooperation, negligence of selfishness
- Ex. Movies, product, technology, even people

GLOBAL CHALLENGES

1. War and terrorism in middle east

2. Political instability

DOMESTIC ISSUES

1. Unemployment
2. Territorial dispute with China
3. Ongoing war in Mindanao

02-22
DEMAND, SUPPLY, AND MARKET EQUILIBIRIUM

BASIC DECISION MAKING UNITS

 FIRM, organization that transforms resources(inputs) into products(outputs);

primary producing units in a market economy; firma=business; basically, a
company (bahay kalakal); provide needs and wants
 ENTREPRENEUR, who organizes, manages, and assumes the risks of a firm,
taking a new idea or a new product and turning it into a successful business.
 HOUSEHOLDS, (sambahayan) consuming units in an economy.

INPUT MARKETS AND OUTPUT MARKETS

Output markets, (pamilihan ng mga natapos na produkto) markets in which goods

and services are exchanged

Input markets (pamilihan ng mga salik sa paggawa)

Includes:

 Labor market
 Capital market
 Land market

Demand – the amount of a good that a consumer is willing and able to purchase at all market prices,
holding all else constant.

DEMAND (Gusto mo ba? Handa ka ba? Kaya mo ba?)

DETERMINANTS OF HOUSEHOLD DEMAND

Determinants, factors that affect your demands

 Price of the product

 Income
 Accumulated wealth
 Prices of related products
 Tastes and preferences
 Expectations

QUANTITY DEMANDED, amount of a product that a household would buy in a given

time period if it could buy all it wanted at the current market.
DEMAND SCHEDULE, a table showing how much of a given product a household would
be willing to buy at different prices.

DEMAND CURVES, usually derived from demand schedules; graph illustrating how much
of a given product household would be willing to buy at different prices.

Price and quantity demanded have indirect relationship.

Quantity demanded, x axis

LAW OF DEMAND states that there is a negative or inverse relationship between price
and quantity demanded.

INCOME, sum of all households wages, salaries, profits, interest, payments, rents, and
other forms of earnings in a given period of time. It is a flow measure.

WEALTH OR NET WORTH, the total value of what households owns minus what it
owes. It is a stock measure.

RELATED GOODS AND SERVICES

NORMAL GOODS, goods for which demand goes up when income is higher and for
which demand goes down when income is lower.; the higher your income the more you
consume

INFERIOR GOODS, goods for which demand falls when income rises.; as income rises you
consume less

SUBSTITUTES are goods that can serve as replacement for one another; when the price
of one increases, demand for the other goes up. PERFECT SUBSTITUES are identical
products.; two goods in which a consumer will consume one good or the other

COMPLEMENTS are goods that “go together”; a decrease in the price of one results in
an increase in demand for the other, and vice versa.; two goods consumed together

KANAN=TAAS, KALIWA= BABA

Supply – the amount of a good that a firm is willing and able to offer for sale at all market prices, holding
all else constant.

SUPPLY SCHEDULE, table showing how much of a product firms will supply at different
prices.

QUANTITY SUPPLIED, represents the number of units of a product that firm would be
willing and able to offer for sale at a particular price during a given time period
SUPPLY CURVE, graph illustrating how much of a product firms will supply at different
prices.

LAW OF SUPPLY states that there is positive relationship between price and quantity of
a good supplied.

DETERMINANTS OF SUPPLY

 Price of good
 Cost of producing
 Prices of related products

MARKET SUPPLY sum of all quantities of good or services supplied

MARKET EQUILIBRIUM condition that exists when quantity supplied and quantity
demanded meet; This occurs when there is no surplus or shortage

Excess demand, shortage- a shortage occurs when the quantity demanded is greater than the
quantity supplied at a particular price.

Excess supply, surplus- – a shortage occurs when the quantity demanded is less than the quantity
supplied at a particular price.
SEMIS  Lifestyle trends (social media)
 Religion
MACRO ENVIRONMENTAL ANALYSIS

Political:
Technological:
 Tax Reform
 Government Spending- Fiscal Policy  Technological advances
 Innovations
Budget Surplus; many fund, no
 Research and new development
project
 Technology related legislation
Budget deficit; many projects, no  New Processes
fund

 Political instability
 New Government Regulations
Economic:
 Success of Local Industry
 GDP
 Inflation, loss of value of money
 Interest Rate
 Foreign Exchange
Legal:
 Philippine Labor and Employment
Plan
- Aimed exclusive growth through
decent and productive work.
 New Regulations
- Labor, gender inequality, anti-
discrimination law
 New and updated business
requirements
- Business permit, sanitary permit

Social:
Environment:
 Culture
 Population  Migration, Population
 Social and business determinants  Investment in real estate
 Demography  Resources constraints
* PSA records birth, marriage, and  Environment regulations
death  Climate change
Primary Sector- Agricultural Sector

- Includes industries in the business of extracting raw materials from natural

resources

Secondary Sector- Industry Sector

Tertiary Sector- Service Sector

- Covers marketing and selling of raw and manufactured products

FINALS: 04-18

SWOT MATRIX- strengths, weaknesses, opportunities, threats

- Framework to analyze the business

- Tool normally used in industry analysis

- SWOT elements are studied based on two perception- the impact and the
coverage
- Positive impact: strengths and opportunities
- Negative impact: weaknesses and threats
- Internal: strengths and weaknesses
- External: opportunities and threats
Sustainable development is the development that meets the needs of the present without
comprising the ability of future generations.

*Umuunlad pero hindi napapabayan ang mga resources

3 factors: Social, Economic, Environmental

Social, community; consumers; supporters

Environmental, planet; natural resources

Economic, profit

Activity, 17 SDG. Choose a number

Why do you think that sdg need to be address and why

Sustainable Development Goal Number 13, climate action, is for urgent measures to combat
climate change and its impacts. I believe this goal needs to be urgently addressed ahead of
everything else because it associates with all other 16 Goals

Moreover, climate change is currently affecting every country in the world. It is disrupting local
and national economies and affecting livelihood, communities and countries today and even
more in the future. People are experiencing adverse impacts of climate change. Greenhouse
gas emissions from human activities are causing climate change, and the global temperature is
still increasing. Indeed, climate action is the most fundamental goal to transform our world for
the better. There is still time to limit climate change, but only if we take the challenging action
instantly.