Republic of the Philippines

Bulacan State University

Bustos Campus
Bustos, Bulacan

Casey Lee DG. De Guzman

BSE 1I

CHAPTER 1: Introduction to Microeconomics

Finding the material means to satisfy desires has presumably been a constant challenge for
humans, according to archeological and written records of their existence. Human life requires
access to food and shelter. Other products give people pleasure or value by satisfying a variety
of human desires. "Economics" is the study of how people solve these provisioning-related
challenges. In the 19th century, social science began to take shape, and distinct fields were
established. As distinct academic disciplines, social science branches such as anthropology,
politics, sociology, psychology, and economics all emerged. The term "political economy" was
changed to "economics"in the latter part of the 19th century. Since then, economics has
frequently been defined as "the study of how scarce resources are allocated to satisfy unlimited
wants." As a field of expertise, economics is often viewed as a choice science that aims the best
approaches for technical utilization issues. By interacting socially and using technology, humans
have attempted to address the issue of provisioning. When two or more people engage socially,
it refers to their relationships.

An "individual" in this context is capable of making a choice and following through on that
choice. A contract is a pact made between two people or agents. Social structures and
individual preferences and beliefs may both have an impact on the agreement. Embedded
inside a social system, a social institution is a recurring pattern of conduct. A social institution is
marriage, for instance. Between the two of them, there is a contract. Normative social norms
and societal rules have an impact on the structure of that contract. In modern, neoclassical,
economic analysis (we will call this “orthodox” economics), the problem is structured so the
wants are taken as given and the problem is to produce the goods that satisfy the greatest
wants. Scarcity requires that the individual or agent make choices. An individual in isolation
(Defoe’s Robinson Crusoe before Friday) would have to make choices since time and resources
are limited. It would be necessary to choose whether time was to be spent catching fish,
gathering coconuts, reading or building shelter. If the choice were to catch fish, he/she would
have to choose between making a net, a fishing pole or trying to catch fish by hand. The choice
to spend an hour fishing implies that that hour cannot be used to gather coconuts. In a
civilization, social interaction is necessary to coordinate individual conduct. This kind of social
engagement might be cooperative or competitive. Through social contact, the allocation
problem can be solved, and in the process, a number of institutions, organizations, views,
principles, perspectives, and shared values are developed. Society must find a solution to the
provisioning issue while being bound by institutions, technology, and resource endowment and
led by these values, perceptions, and beliefs. There are various levels at which one might
approach the study of economics.
At its most basic level, economics is the study of how economic systems, or economic
provisioning, are created and develop over time. At a deeper level, economics examines the
design and mechanisms by which a given system addresses the provisioning or allocation
problem. Economic system structure and evolution research is often interdisciplinary. In its
examination of the social process of provisioning, it may draw heavily on history, psychology,
sociology, law, and philosophy. When studying a single system, economics has a tendency to be
more specialized and to concentrate on particular processes.

CHAPTER 2: The Problem of Provisioning

At any given time, society is faced with a limited supply of resources and a specific level of
technology. As a result, the number of goods and services that may be produced during that
time period is limited. It is not always possible to generate all that everyone wants to have due
to human aspirations and needs for food, clothing, and shelter. Individuals face the economic
challenge of scarcity when their wants exceed what can be produced. Either lowering individual
desires or boosting the output of products and amenities can alleviate the problem of scarcity.
When it comes to coordination of efforts, Individuals must coordinate their efforts after they
adopt specialization and the division of labor. Various levels of interaction are required. The
interactions between groups and individuals that make up society are intricate. Institutions
throughout society are a result of these relationships. Human interaction can be examined from
a variety of angles, and the study of these relationships and institutions is referred to as "social
science." Examples of social sciences include sociology, political science, law, history,
psychology, religion, anthropology, and economics. These topics are frequently explored
separately.

Additionally, production involves modifying inputs to improve their capacity to meet consumer
demands. Resources or "factors of production" are other names for inputs. Typically, economists
will divide inputs into three categories: labor, capital, and land. The effort put in by people to
create goods that satiate consumer demands is the basic definition of labor. Land is a resource
that is a "gift of nature," whereas capital is typically viewed as an element created through work
but used to produce more products and services. In market-oriented economies, the last group
of inputs to be included as a factor of production was entrepreneurial talent. For the purposes of
coordinating the production, distribution, and consumption of goods and services, any
community must establish a set of social institutions (behavioral patterns). Such organizations
can assume a broad variety of shapes according to the surrounding physical environment, level
of technological expertise, social values, and other elements. These institutions and patterns of
behavior may be dependent on rivalry, collaboration, or a combination of both. While other
systems could prioritize cooperation more, market systems frequently place a greater emphasis
on competition. A bicycle race serves as a good analogy.

CHAPTER 5: Criteria for Evaluation

People have to make decisions regarding their goals (or ends) and the options (or means)
they will use to reach those goals. It is vital to evaluate or prioritise aims and means in order to
make these decisions. Criteria for valuing the alternatives are needed for the ranking process
and the final prioritization procedure.Tradition can be used to rank both aims and means.
Communities frequently come up with conventional fixes for economic issues. Hunting may be
the answer to the issue of obtaining food in some communities. Given technology, natural
surroundings, and manmade environments, hunting a particular species or species of animals
offers a practical answer. These answers might be supported by the development of religious
and other social institutions.

For ethics, in order for our purposes, there are two main ways to determine what is good
and wrong. Humans have a tendency to rationalize and justify their values, beliefs, and conduct.
They like to believe that what they believe and do is "the right thing to do." One strategy is to
evaluate the morality of a goal or action in light of obligation. Deontological ethics is this. The
second strategy is to evaluate the rightness or wrongness of a course of action in light of its
results or repercussions. Axiological ethics is the term used to describe this strategy. A third
strategy is teleological ethics, which assumes that every individual or group of people has a
specific purpose, and that the moral goal should be the accomplishment of that purpose.

Efficiency is a way to gauge how well a target has been accomplished. Efficiency can still
be used to assess the degree to which a purpose is attained even if it is immoral or unethical.
Take oven construction as an example. A "too small" oven wastes energy since the door is
opened and shut more frequently, which wastes electricity. A "too large" oven will not efficiently
heat the desired amount of room. The decision between utilizing a toaster oven and a regular
oven is based on how effective each is for various jobs. Efficiency would play a significant role in
deciding the size of the ovens if the task were to dispose of human dead during a genocide,
despite the fact that the intended is deeply immoral.

When it comes to Marginal analysis, Decisions in economics are always made at the
“margin.” A decision to change one variable will cause a change in some other related variable.
An act or choice will have benefits and costs associated with that act. An increase in the
production of xebecs may require a reduction in the production of Yawls: the benefit is more
xebecs, the cost is fewer yawls. A change in the price of a good will affect how many units are
sold, and this will affect how much money is made overall. Marginal revenue is the variation in
total revenue resulting from a change in the number of units sold. Numerous different kinds of
relationships are covered by the marginal idea. These are typically referred to as a "one unit"
shift in the variables in economics principles. A change determined through subtraction is
denoted by the Greek letter delta,. In other instances, a change that approaches 0 will be
indicated by a derivative (d) or partial derivative (). Numerous economic interactions can be
described using the marginal method. In actuality, the middle to late 19th century was the
formative era for the creation of microeconomics and was also called the marginalist revolution.