Critical

Content
Quarter 1
Activity No. 1
Direction: Let us check your knowledge to our topic. Kindly arrange
the following words. These are the terms you commonly encounter
when you make decisions of going to the market. Examples of these
items are given on the right column.
1. MIRECOOCNOMSCI __________________individuals and industries
2. TENAGILBDSOOG ____________________basic goods/commodities
3. SARCITYC ___________________________shortage in supply
4. UXDOOSLUGYR ____________________expensive jewels and gems
5. CDAOTOSAGLIP _____________________baking machines
•Economics is a social science because it
studies human behavior just like psychology
and sociology.
•A social science is, broadly speaking, the
study of society and how people behave and
influence the world around them. As a social
science, economics studies how individuals
make choices in allocating scarce resources to
satisfy their unlimited wants.
THE FIELDS OF ECONOMICS
 BASIC TERMS TO UNDERSTAND ECONOMICS
• It is essential that you familiarize yourself with the study of economics.
This will facilitate your understanding of economic analysis. Specifically
you meet GOODS –which yields to your satisfaction. It is anything used
to satisfy your wants and needs.
• TANGIBLE GOODS –material goods or commodities.
Ex. Bags, books, clothes.
• INTANGIBLE GOODS – when they are in the form of services. Those
rendered by doctors, engineers, doctors and other professionals.

Goods may also be classified according to use.

1. CONSUMERS GOODS – goods for the ultimate consumption of the
consumers. Ex.: toothpaste, bath soap, etc.
2. CAPITAL GOODS or INDUSTRIAL GOODS - used in the production of
other goods and services. Ex.: buildings, machinery,
3. ESSENTIAL GOODS- used to satisfy the basic needs of man.
Example: foods and medicine.
4. LUXURY GOODS –goods man may do without, but may give comfort
and satisfaction. Ex., perfume, cakes; chocolates expensive cars.
5. ECONOMIC GOODS –goods which are useful and scarce; with value
attached to them and a price has to be paid for their use. If a good so
abundant and it can satisfy everyone’s needs without anybody paying for it,
then, that good is free. The air is free, but the air from an aircon is an
economic good.
 ECONOMIC RESOURCES OR FACTORS
In the article of Nowaczyk , J (2020) on Identifying the Factors of Production,
he defined economic resources as the factors of production for goods and
services.
The factors of production are inputs combinations in the production of goods
and services to make an economic profit for the firms.
These factors of production are:
1.Land 3.Capital
2. Labor 4.Entrepreneurship
Resources are limited in nature, but human wants and needs are
unlimited, thus, an efficient allocation of these resources or factors of
production is a big challenge for every economy. Economics also helps
the entrepreneurs and the economy to allocate resources in the
production of supplies to meet the demands of the consumers.
Land as a Factor of Production
Land - natural resources available to create supply such
as raw materials that comes from the ground. It can be a
non-renewable resource; commodities such as oil and
gold; and renewable resource, such as timber.
Oil is a natural resource, but petroleum gas is a capital
good.
Farmland is a natural resource, but a shopping center is a
capital good.
Owners of lands receive a payment known as rent.
Labor as a Factor of Production
Labor is the work done by people- education,
skills, and motivation and productivity.
Productivity measures how much each hour of
worker time produces in output.
Workforce receives wage for his labor.
 Capital as a Factor of Production
Capital or capital goods are capital –the money
that companies used to buy resources; man made
objects like machinery, equipment, and chemicals that
are used in production.
For example, capital goods include industrial and
commercial buildings. A commercial aircraft is example
of a capital good.
The owner of capital earns an income called interest.
Entrepreneurship as a Factor of Production
Entrepreneurship develops an idea into a
business. An entrepreneur combines the other
three factors of production to add to supply. The
most successful entrepreneurs are innovative and
risk-takers.
The income entrepreneurs earn is profits.
 Characteristics of Resources:
1.Scarcity: insufficient resources to supply all the desires and
needs of individuals.
In the production of goods and services; there are issues that
economics may encounter: these include:
for Land – inadequate land and natural resources; polluted areas;
overcrowded spaces;
for Labor – unskilled workforce; mismatch of jobs; for capital - low
quality of equipment/machines; insufficient fund/capital;
and for entrepreneurship –Inadequate training of entrepreneurs;
limited opportunity; scarcity of great ideas but many competitors
in the market.
2. Multiple use: Resources can have more than one
possible use.
For example, a plot of land can be used to plant coffee or
to build a factory.
3.Partially replaceable: one resource can replace another
in the production of a good or service (e.g., replace
manual labor with technology).
Scarce resources and unlimited desires → Scarcity
Scarcity and alternative uses → Choice
Choice → Opportunity cost
 BASIC ECONOMIC PROBLEMS OF SOCIETY
1. What to produce and how much - society must decide what goods
and services should be produced in the economy. Having decided on
the nature of goods that will be produced, the quantity of these goods
should also be decided on.
2. How to produce - is a question on the production method that will be
used to produce the goods and services. This refers to the resource
mix and technology that will be applied in production.
3. For whom to produce - is about the market for the goods. For whom
will the goods and services be produced? The young or old, the male
or female market, the low-income or the high-income groups?
 Basic Economic Problems Confronting the
Development of the Philippines in the 21st Century

•Poverty and Unequal Distribution of Wealth

•Demographic changes and economic
implication
•New adaptation of modern technology
 ECONOMIC SYSTEMS

The economic system is the means through

which society determines the answers to the
basic economic problems mentioned. A
country may be under any of the following
types or even a combination of the three
economic systems:
1. Traditional economy - Decisions are based on
traditions and practices upheld over the years and
passed on from generation to generation. Methods are
stagnant and therefore not progressive. Traditional
societies exist in primitive and backward civilizations.
2. Command economy –this is the authoritative system
wherein decision-making is centralized in the
government or a planning committee. Decisions are
imposed on the people who do not have a say in what
goods are to be produced. This economy holds true in
dictatorial, socialist, and communist nations.
3. Market Economy –The most democratic form of
economic system. Based on the workings of demand and
supply, decisions are made on what goods and services
to produce.
Source:
What I Need to Reflect
Today, we are in a new normal way of living, a very different one
from way we have lived for several years. It’s because everyone
has that fear of the COVID 19 that might cause us from health and
economic issues. Everyone, therefore, has to be very responsible
in his behaviors in the market; and become efficient in his
consumption; friendly to the environment or the natural
resources as these may become scarce in the future. Everyone
must become aware of the micro and macro levels of the
environment and contribute to the growth of our economy.
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