WEEK 1 10 Principles of Economics (5 for Micro)

Economics “How People Make Reasons”

● how society manages it scarce
resources
● Oikonomia- one who manages a
household
● Time is the most common resource
● Resource is not limited on money
Law of Scarcity
● Resources are limited for the
unlimited wants of man
Branches of Economics
● Microeconomics
● Macroeconomics
○ Aggregate- whole formed/
totality
1. People Face Tradeoff
choosing one option over another
2. The cost of something is what you
give up to get it
what you have to give up to buy what
you want
3. Rational People think at the
Margin- Marginal Changes;
adjustment to an existing plan of
action
4. People Respond to Incentives
cost vs. benefits

Scientific Methods of Economics “How People Interact”

● Data Gathering
● Economic Analysis 5. Trade can make everyone better off
● Economic Conclusion concept of competition

Economic as a Science
● Social Science
○ Uncontrollable variables
○ Allocation of resources
■ Efficient- faster
■ Effective-equal by
factor
● Applied Science
○ Application of Economic
principle

Methodologies of Economics
● Positive Economics
○ The world as it is
○ Statements based on facts

● Normative Economics
○ The world as it should be
○ Statements based on opinions
WEEK 2
MARKET STRUCTURE
Market
● Where buyer and seller meet

Ceteris Paribus
● Things are equal or constant

Competitive
● Many buyers; Many seller

Market Structure
1. Perfectly Competitive
2. Monopolistically Competitive (madaming seller, same products but slightly different)
3. Monopoly (isang seller)
4. Oligopoly
5. Monopsony
6. Oligopsony

Homogeneous- same products/ commodity

Pricing - kung sino ang mas onti, siya ang magdidikta ng presyo except sa monopolistically
competitive

CONSUMER BEHAVIOR

Consumer Theory- individual consumption decision are made to maximize utility (satisfaction)

Utility- individual’s pleasure, happiness or satisfaction

Measuring Utility- how utility are being measured

Marginal Utility- quantify changes per/ in serving or intake

Saturation Point- satisfaction starts to decline

Law of Diminishing Marginal Utility

● Satisfaction will start to decline if reaches saturation point

Properties of Consumer Preferences

1. Completeness- alam ng buyer ang ayaw at gusto niya

2. Transitivity- ordering ; comparison
3. Non-satiation- more is better

Points to Remember in Indifference curve:

1. Indifference Curve- combination of two goods based from references that yields same
level of satisfaction
2. The higher the indifference curve, the better based on non-satiation
3. Budget Constraint exist that limits our purchase
Week 4 and 6
Purchasing Power of Peso
ECONOMIC ISSUES ● Value of the currency at a given time
● “Inflation does not directly affect the
Philippine Economic Issues in 21st real purchasing power of the people”
Century ● Higher the inflation lower value of
1. Inflation peso
2. Unemployment
3. Minimum Wage Inflation- tumataas ang price
4. Exchange Rate Deflation- bumababa ang price
5. Taxation Hyperinflation- excessive increase in price
(exceeds 50%)
Inflation Stagflation- no increase and decrease
● Overall increase in the price levels of
an economy’s basket of goods ● Generally inflation is not bad
● Determined by range ● Inflation is an output/result which
● No exact amount or measures stated that there’s an activity in the
● More money is needed to purchase a economy
product/commodity
● More printed money conclude lesser Unemployment
value ● Percentage of the total number of
people in labor force that is not
Basket of Goods engaged in any economic activity
● Common good
● Measured yearly Labor Force
● Not same goods every year ● Total number of people with the age of
● Bangko Sentral ng Pilipinas states the 15-64 years old , employed or
basket of goods for the specific year unemployed, and those who are
looking for work
Concept of Consumer Price Index
● The yardstick used to determine the Employment + Unemployment = Total
movement of prices Labor Force (100%)

Base Year Unemployment Rate Formula

● The year with which the current year Employment rate
is being compared to —---------------------
● Pwede icompare sa lumipas na taon Total Labor Force Rate
kahit hindi ito yung sinundan na taon
● Bawal icompare sa future year Example:

CPI Formula
Cost of basket of goods in the Current year
—------------------------------------------------------
Cost of basket of goods in the Base Year

Connection of concepts
● Increase in employment is a
manifestation of inflation
Unemployed Classification
● Without work
● Currently available for work
● Seeking for work
Business Cycle
● Known as boom-bust or economic
cycle
● Movement in economic activity
(upward or downward) in a specific
time period or over time
● Contraction- downward movement in
economic activity
● Expansion- upward movement in
economic activity
Business Cycle Diagram
Boom/Peak- upper part (as a point in that
time only)
Recession- consecutive decrease
● Pagbaba sa production
● Humihina
Bust- lowest part
Depression- not necessary to undergo
Demand Curve for Labor
● Inversely related (opposite)
● Downward sloping curve
Minimum Wage
● Legally mandated price floor on
hour/daily wages (pinakamababa)
● Bawal na mas bumaba
● Exempt worker is an exception which
they have their own wages according
to acts/law
○ Example: Yaya (Domestic
Workers Act/ Kasambahay
Law)
Exchange Rate
● The price of a domestic currency in
terms of another country’s currency
● Remittance indicate that there a
movement in economy via money
WEEK 8
DEMAND AND SUPPLY
Demand- buyer is the center concept
Quantity Demand- the amount of good that
buyers are willing and able to purchase
(requires both)
Law of Demand
● quantity demanded of a good falls
when the price of a good rises
● Inverse relationship between Demand
and Price
● Downward sloping Graph
Demand Schedule
● Table showing the relationship
between the price of a good and the
quantity demand
Demand Curve
● Graph that shows the relationship
between the price of a good and the
quantity demand
Determinants of Demand
1. Income
● Normal Goods- increase in
income leads to an increase in
demand
● Inferior Goods- increase in
income leads to a decrease in
demand
2. Price of Related Goods Service
● Substitute Goods- two goods
for when an increase in the
price of one leads to an
increase in the demand for
another.
○ Positive/Direct
○
● Complementary Goods- two
goods for when an increase in
the price of one leads to an
decrease in the demand for
another.
○ Inverse
3. Taste and Preferences
● As taste and preference
increase, we can expect an
increase in demand
● Positive and Direct
4. Expectation on future prices
● Increase in FUTURE prices,
increase PRESENT demand
● Positive and direct
5. Number of Buyers
● Increase in population,
increase in quantity demand
● Positive and Direct
Supply- seller is the center concept
Quantity Supply- the amount of good that
sellers are willing and able to sell (requires
both)
Law of Supply
● quantity supply of a good rises when
the price of a good rises
● Positive and direct
Supply Schedule
● Table showing the relationship
between the price of a good and the
quantity supplies
Demand Curve
● Graph that shows the relationship
between the price of a good and the
quantity supplies
● upward sloping
Determinants of Supply
1. Input Price
● Price of RAW Materials
 ● As the price of raw materials Shortage
increase, QS decreases ● Situation in which QD is greater than
● Inverse QS

2. Technology LAW OF SUPPLY AND DEMAND

● Technological advancement ● Claims that the price of any good,
increase, QS increases adjust to bring the QS and QD for that
● Positive and Direct good into balance

3. Price of Related Goods 3 Steps in Analyzing the Change in

*same concept and relationship with
demand’s concept
4. Expectation
*same concept and relationship with
demand’s concept
5. Government Regulation
● Taxes and subsidies
● Tax : Decrease in Tax, Increase in QS
(inverse)
● Subsidies: Increase in Subsidies,
Increase in QS (Positive and Direct)
Equilibrium
1. Decide whether the events shifts the
supply or demand curve
2. Decide in which direction the curve
shifts
3. Use supply and demand diagram to
see how the shift changes the
equilibrium price and quantity

6. Number of Suppliers
● Increase in Suppliers,
Increase in QS
● Positive and Direct

Market Equilibrium
● Situation in when the price has
reached the level when QS equals the
QD

Equilibrium Price - price that balances QS

and QD

Equilibrium Quantity- QS and QD at the

equilibrium price

Movement and Shifting

● Right-Increase
● Left- decrease

Surplus
● Situation in which QS is greater than
QD