ECONOMICS

FIRST ACTIVITY

1. The problems of economics arise out of the scarcity of resources to satisfy

human wants. Human wants are unlimited, but the resources required in
satisfying them are limited. If human wants are unlimited, but resources to satisfy
those wants are limited, then people in the society face the problem of scarcity.
And that’s where economics step in, because economics is the study of how
people make choices in the face of scarcity.
2. The different economic activities are categorized into primary activities (related to
the extraction of natural resources), secondary activities (related to the
processing of raw materials) and tertiary activities (related to providing services).
3. We can apply economic principles in our daily life in deciding what to buy, how to
save money, prioritizing needs over wants when there is inflation, how to manage
our time everyday and etc.
ACTIVITY 2

1. Define the following:

a) Demand – It refers to the relationship between quantity and price.
Demand is defined as the different quantities of a resource, good or
service that consumers are willing and able to buy at a given time at
various possible prices.
b) Supply – It is the number of items that sellers are willing and able to sell in
the market at different prices during some specified period of time. Supply
also refers to the amount of goods that are available.
c) Surplus - A surplus is the unused portion of an asset or resource. There
are two kinds of economic surpluses: consumer surplus and producer
surplus. When the price of a good or service falls below the maximum
price that a consumer will pay, a consumer surplus occurs. While a
producer surplus occurs when the price of a good sold sells for a higher
price than the producer expected, allowing the producer to profit
excessively.
d) Shortage – A shortage or excess demand is a situation in which the
demand for a product or service exceeds its supply in a market. Shortage
should not be confused with "scarcity," because shortages are usually
temporary and can be remedied, whereas scarcity is systemic and cannot
be replenished.

2. What are the factors of demand?

- The determinants of demand are consumers tastes and preferences,
consumer’s income, the population growth, prices related goods (such as
substitute goods) and expectations of future prices that may affect the
demand of goods and services.
3. What are the factors of supply?
- Supply can be influenced by a number of factors that are termed as
determinants of supply. It includes price (how much the consumer is willing to
pay, cost of production, technology (can cut down cost of production), and
government’s policies.