Week 1

Lesson 1: Applied Economics: An

Introduction
Vocab.

Authoritative - commanding and self-confident; likely to be respected and obeyed

Democratic - a form of government in which the people have the authority to choose their
governing legislation
Muster - collect or assemble (a number or amount)
Primitive - relating to, denoting, or preserving the character of an early stage in the
evolutionary or historical development of something
Psychology - is the scientific study of the mind and behavior.
Sociology - the study of the development, structure, and functioning of human society

Economics
- Greek words ‘oikos’-household
‘nomos’-management
- Everything that concerns spending money and choosing
- Not just the study of money
- Study of the needs and wants of a person

● The reason why we need to study economics is the very reason why it exists:
SCARCITY- lack or insufficient resources to satisfy the need and wants of a
community or a population.

● Two types of scarcity

❖ Relative Scarcity - a good is scarce compared to its demand
❖ Absolute Scarcity - supply is limited or no available to supply the demand

● When one experiences scarcity, a good choice and decision making will come to
play.
● Opportunity Cost- the value of the best foregone alternative.
● The moment you choose one choice is the moment you have experienced
economics.
● Too much supply is SURPLUS

Applied Economics
- When economist do their job
- They’ll apply theories, concepts, numbers, and analysis to come up with a solution.

Economic Resources
- when a problem occurs, a country should muster ER in order to fill in the gap of demand
and supply
 ➔ Land - natural resources found in nature and not man made
➔ Labor - physical and human effort exerted in production
➔ Capital - man-made resources used in the production of goods and services,
machines
➔ Enrepreneurs/ship.

Economics as a social sciences

● Concerns the human behaviour like psychology and sociology
● Social science- the study of society and how people behave and influence the world
around them.
● Studies how individuals make choices in allocating scarce to resources to satisfy the
unlimited wants

Branches of Economics

● Macroeconomics
- Concerned with the performance of the entire economy.
- Focus on unemployment, growth rate, GDP, and inflation.
● Micro Economics
- Concerned with the behaviour of individual entities
- Focus on how goods flow from business firm to consumer
and how resources move from resource owner to business firm

Basic Economic Problem of the Society

1. What do produce and how much

2. How to produce?
3. For whom to produce?

Economic System
- Means through which society determines basic economic problems mentioned.

1. Traditional Economy
- Decisions based on traditions, practices, and primitive or old ways. Bhutan
and Haiti
2. Command Economy
- Authoritative system, decision are centralized in gov. or planning committee
3. Market Economy
- Most democratic form of economic system
4. Mixed Economy
- The combination of any two economic system
Week 2

Lesson 2: Law of Demand and Supply

Market is not just the actual place for buying or selling but it is also the interaction between
buyers and sellers of trading or exchange.

Types of Market:
● Goods Market - most common type of market as it is where we buy consumer
goods.
● Labor Market - is where workers offer services and look for jobs, and where
employers look for workers to hire.
● Financial Market - features the stock market where securities of corporations are
being traded.

Demand
- needs and wants of a person sometimes depends on the season or weather.
- it is the willingness of a consumer to buy a commodity at a given price.
- It is particularly the motivation of a person to purchase goods/services according to
their needs or wants.

Importance: Demand function is used in order to anticipate a sudden surge of demand and
prevent oversupply (surplus). By doing such, no waste of resources may be incurred and
lesser cost will be encouraged.

Quantity demanded (affected by the price)

- the total amount of a good or service that consumers demand over a given interval of
time.
- The lower the price, the higher the quantity demanded. The higher the price, the
lower the quantity demanded.

Law of Demand
- As the price increases, the quantity demanded for that product decreases. As the
price decreases, it motivates the consumers to buy more.

Ceteris Paribus which means that all related variables, except those that are being studied at
the moment, are held constant.

Supply
- is the quantity of goods that a seller is willing to offer for sale.
Quantity Supplied
- the number of goods or services that suppliers will produce and sell at a given market
price.

Law of Supply
- the lower the price, the lower the quantity supplied.
- the higher the price goes, the sellers become more motivated to sell more.

Price
- determinants of quantity demanded and quantity supplied.
- referred to as the equilibrium price and represents an agreement between producers
and consumers of the good.

Market equilibrium
- is a state of balance when demand is equal to supply in a given (optimum) price.
Meaning to say, the quantity the sellers are willing to sell meets the quantity of buyers
who are willing to buy the product at a certain price.

equilibrium - no scarcity, no surplus

equilibrium point - the point where the supply curve (S) and the demand curve (D) intersect
(tawag sa point pag nasa graph)

Week 3
ELASTICITY
-Elasticity in economics will help us notice the changes.
-Elasticity is a measure of how much buyers and sellers respond to changes in market
conditions.

Why do we need to study Elasticity?

- Elasticity will enable us to determine how much of a good or service buyers
will consume when the price changes.

Degrees of Elasticity
 1. Elastic - A change in a determinant will lead to a proportionately greater
change in demand or supply. The absolute value of the coefficient of elasticity
is greater than 1.
2. Inelastic- A change in a determinant will lead to a proportionately lesser
change in demand or supply. The absolute value of the coefficient is less than
1.
3. Unitary- A change in determinant will lead to a proportionately equal change
in demand or supply. The absolute value of the coefficient is equal to 1.

Formula in finding elasticity:

𝑄2 − 𝑄1
𝑄1
𝑃2 − 𝑃1
𝑃1

Where:
𝐸𝑝 = Elasticity
𝑄2 = New quantity of demand
𝑄1 = Original quantity of demand
𝑃2 = New price
𝑃1 = Original Price

WEEK 4
MARKET STRUCTURE
Competition happens in market structure.

Types of Market Structure

1. Perfect Competition
- Most ideal situation for buyers and sellers
- Large number of firms competing
- Businesses selling basic needs and prime commodities
- There are many buyers and sellers that each has a little impact on the price.
- No single seller can change the output of a product and no single buyer can
influence the product.
 - Products are identical to competitor’s products, in which consumers will have
no preference in buying from one seller to another.
- There are no significant barriers from entering and exiting the market.
Market price and quantity output are determined exclusively by force of
demand and supply

Example: grocery store, Water refilling station, rice retailing, bakery

- businesses that are selling basic needs and prime commodities.

2. Monopoly
- A market or firm has no substitute
- There are no options or alternatives
- A single seller has control of the entire supply of raw materials.
- Ownership of a patent or copyright may be deemed as monopoly.
- Entry and exit are blocked in monopoly.
- The seller can manipulate product output, hence can increase price and profit

Example: CELCOR, NBA, PBA

3. Monopolistic Competition
- Large number of firms competing against each other
- Firms selling differentiated products, which are highly substitutable but are not
perfect substitutes.
- There is free entry and exit in the market that enables the existence of many
sellers.
- It is similar to monopoly in that the firm has some control over the price and
quantity.

Example: Car Companies

4. Oligopoly
- Dominated by a few firms, resulting in limited competition
- Can collaborate with or compete against each other to use their collective
market power to drive up prices and earn more profit
- Action of each firm affects other companies/firms
- Interdependence of firms

Example: Gasoline Companies

CONTEMPORARY ECONOMIC ISSUES AFFECTING FILIPINO

ENTREPRENEURS
Savings and Investment
- Savings and investment are necessary to build a future. Savings is to
investment as food is to the body nourishment process.
- Savings and investment are also a great concern by businesses, as there will
be no business if there is no investment and when a business does not save,
it might stop its operation as it will not have enough income to operate in the
future.
- Businesses, in order to continue operation, need to have a certain amount in
which the business will keep on operating regardless of the losses. Savings
can also boost or improve the quality of a product and the process as well.
- And when we talk about savings and investment, we must always remember
that before saving or putting up an investment we should have a plan and
goal in mind that sees what we can have in return.

Rent
- In simple words, ‘rent’ is the payment or income made from renting out a land or a
property. Usually, rent is seen and is used in housing (apartments, dorms, etc.) and
commercial buildings used for businesses.
-

Wages
- Wages play an important role in an economy as it is the major source of
income of an individual.
- Wage is the amount paid by an employer to an employee, according to
contract and on an hourly, daily, or piecework basis. It is a major piece that
contributes to an economy of a country as well.

Taxes
- Taxes are paid to the government to provide public goods and services that empower
and enable individuals and institutions alike.
- Taxes are supposed to maximize the benefits and minimize the losses. But the
misuse and abuse of it can cause heavier burdens for society to carry.
-

Nagmmeet yung seller at buyer at a certain price

Market equilibrium
 - is a state of balance when demand is equal to supply in a given (optimum) price.
Meaning to say, the quantity the sellers are willing to sell meets the quantity of buyers
who are willing to buy the product at a certain price.

Balance