REVIEWER IN APPLIED ECONOMICS JEAN-BAPTISTE SANG
ADAM SMITH- production and distribution
ECONOMICS- allocation and utilization of scarce
resources
-Satisfaction of the society’s unlimited needs and wants
-Greek word “oikonomios” means household
management
SCARCITY- means that society has limited sources and
cannot produce all the goods and services people wish
to have
ECONOMICS AS SOCIAL SCIENCE- explanation and
predictions of observed phenomena in the society
-relation between people during the production,
distribution and consumption of wealth in human
society
ECONOMIC AS APPLIED SCIENCE- follows systematic
procedure to solve issues and problems of the society
APPLIED ECONOMICS- designed to analytically review
potential outcomes without the noise associated with
explanations that are not backed by numbers
ECONOMETRICS- branch of economics concerned with
the use of mathematical tools (statistics) in describing
economic systems.
TWO FIELDS OF ECONOMICS
MICROECONOMICS- small unit of economy like
individual as an economic agent
MACROECONOMICS- economy as a whole like
behaviour of the aggregate of economic activity
POSITIVE ECONOMICS- seeks to unnderstad behaviour
and the operation of systems without making
judgments. Describe what exists and how it works
4 FACTORS OF PRODUCTION
1.CAPITAL- capital goods are goods or money that
companies used to buy resources.
2.LABOR- work done by people- education, skills,
motivation and productivity
3.LAND- natural resources available to create supply
such as raw materials that comes from the ground
4.ENTREPRENEURSHIP- the idea unto the business
LAND+LABOR+CAPITAL+ENTREPRENEURSHIP=PRODUC
TION
CLASSIFICATION OF GOODS ACCORDING TO USE:
1.CONSUMER GOODS- goods for ultimate consumption
of the consumers
2.CAPITAL GOODS- used in the production of other
goods or services
3.ESSENTIAL GOODS- used to satisfy the basic needs of
man
4.LUXURY GOODS- man may do without but may give
comfort and satisfaction
5.ECONOMIC GOODS- useful and scarce without value
attached to them and a price has to be paid for their
use.
DIVISIONS OF ECONOMICS
1.PRODUCTION- process of producing or creating goods
needed by the household to satisfy their needs.
2.DISTRIBUTION- marketing of goods and services to
different economic outlets for allocation to individual
consumers.
3.EXCHANGE- process of transferring goods and
services to a person or people in return for something
4.CONSUMPTION- proper utilization of economic goods
5.PUBLIC FINANCE- activities of the government
regarding taxation, borrowings and expenditures
BASIC ECONOMIC PROBLEMS OF THE COUNTRY
1.WHAT TO PRODUCE?- decide the type and quantity of
good/services to be produced to meet the immediate
needs and desires of the people.
2.HOW TO PRODUCE?- production of goods and
services needs effective methods and processes
3.FOR WHOM TO PRODUCE?- decides on the
distribution of the goods and services among the
members of society who need them the most
4.HOW MUCH TO PRODDUCE?- quantity that will be
produced is determined by the demand of the people
PRODUCT POSSIBILITIES FRONTIER (PPF)
1.SCARCITY- indicated by the unattainable combination
above the boundary
2.CHOICE- seen by the need to choose among the
alternative attainable points along the boundary and
opportunity cost
3.OPPORTUNITY COST- the cost of using them in their
best alternative
LAW OF SCARCITY- goods are scarce because there are
not enough resources to produce all the goods that the
people want to consume.
PRODUCTION- act of making goods and services
CONSUMPTION- act of using them to satisfy human
need/wants
DEMAND- desire for a particular good backed up by
sufficient purchasing power.
SUPPLY- quantity of commodity that is in the market
and available for purchase at particular price.
MARKET- is a place where buyers and sellers interact
with each other and that exchange takes place among
them.
DETERMINANTS OF DEMAND:
1. Income
2. Population
3. Tastes and Preferences
4. Price expectation
5. Prices of related goods
DETERMINANTS OF SUPPLY:
1. Technology
2. Cost of production
3. Number of sellers
4. Taxes and subsidies
5. Weather
MARKET EQUILIBRIUM- quantity supplied and quantity
demanded are in balance
ELASTICITY- measures in response to change in the
determinants of demand and supply
CONCEPTS OF ELASTICITY:
ELASTICITY DEMANDED- percentage change in quantity
demanded/ percentage change in price
INCOME ELASTICITY- measures a product percentage
change in quantity as a ration of the percentage change
in income which caused the changed in quantity..
CROSS ELASTICITY- coefficient of cross elasticity of
demand relates a percentage in quantity demanded for
Good A in response to a percentage change in price of
Good B.
PRICE ELASTICITY OF SUPPLY- response to quantity
offered for sale for every change in price
MARKET- infrastructure, systems, institutions, social
relations and procedures wherein buyers and sellers
usually interact with each other to exchange goods and IMPORTANCE OF INVESTMENTS IN THE PHILIPPINE
services. ECONOMY:
MARKET STRUCTURES- refers to how different 1. Boost the economic growth
industries are classified and differentiated based on 2. Creates employment
their degree and nature of competition for services and 3. Creates more business
goods. 4. Increase production of goods and services
4 TYPES OF MARKET STRUCTURE: 5. Increase the standard of living of the people
MONOPOLY- Only a single company that produces a 6. Provides higher revenue to the government
certain product in the market has no close substitutes NET NVESTMENT= GROSS INVESTMENT –
MONOPOLISTIC COMPETITIONS- When there is a DEPRECIATION
numerous quantity of small firms competing against RENT- payment for the use of land, belonging to the
each other. landlord
-many buyers and sellers of the product but the product TWO LAWS REGULATE RESIDENTIAL AND
is not a perfect substitutes. COMMERCIAL LEASES IN THE PHILIPPINES
PERFECT COMPETITION- where a large number of small  Rent Control Act
firms compete against each other  Civil code
-many products are similar and may substitute each  Wage and the wage law
other since they have the same features, price and
quantity. Almost same products
OLIGOPOLY- describes a market structure that is
dominated to only a small number of firms, that results
in a state of limited competition. Few companies and
control over price
CONJOINT ANALYSIS- popular survey-based statistical
technique used in market research
-This is a method used by business leaders to determine
consumer preferences when making decisions.
INVESTMENT- allocation of fund- for future use-
creation wealth
TWO TYPES OF INVESTMENT:
 Long term- more than a year
 Short term- less than a year
DETERMINANTS OF INVESTMENT:
1. Expected return on investment
2. Business Confidence
3. Changes in National Income
4. Interest Rate
5. General expectation
6. Taxes
7. Savings
TRAIN LAW- Tax Reform for Acceleration and Inclusion
(TRAIN) Act, RA No. 10963 is the initial package of the
Comprehensive Tax Reform Program (CTRP) signed into
law by former Pres Dutertelast Dec. 2017
EFFECTS OF HIGH TAXES TO ENTREPRENEURS AND
BUSINESS:
1. Inadequate Income
2. Lower Wages
3. Higher Prices
4. Substandard Products
5. Unavailability of product
6. Poverty and crimes
DTI- Department of Trade and Industry
SMED- Small and Medium Enterprise Development
MSME- Micro, Small and Medium Enterprise
CONTEMPORARY ISSUES FACING THE FILIPINO
ENTREPRENEURS:
1. Investment
2. Infrastructure or technology
3. Competition
4. Taxes
5. Rent
6. Interest Rate
7. Wages/Salary