Jan Joefred F.

Cartel BSED SOC-STUD 3A

LESSON 1: BASIC ECONOMIC CONCEPTS

ACTIVITY #1
I CAN GIVE EXAMPLES!

1. Comparative Advantage - The concept that one country or business can produce a good or
service at a lower opportunity cost than their competitors, gaining stronger sales margins and
greater profitability. For example China has a comparative advantage in electronics because it
has an abundance of labor.
2. Absolute Advantage - Absolute advantage is when a producer can produce a good or service
in greater quantity for the same cost than another party, which can open up even more
widespread opportunities for the division of labor and gains from trade. The countries like China
and Vietnam have an absolute advantage because of their considerably lower unit labor costs.
3. Circular Flow Model - It describes the flow of money and products throughout the economy
in a very simplified way. In short, an economy is an endless circular flow of money.
4. Positive Economics - Positive Economics focuses on the description, quantification, and
explanation of economic developments, expectations, and associated phenomena. It is
descriptive that refers to a science which is based on data and facts.
5. Normative Economics - It focuses on the ideological, opinion-oriented, prescriptive, value
judgments, and "what should be" statements aimed toward economic development, investment
projects, and scenarios. It is one that cannot be tested or verified and is based on a value
judgment.

I CAN DRAW!
I CAN ANSWER!
1. How does the PPF affects our economy at present?
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