Principles of Economics

ECONOMICS
All these activities that are concerned with the production & use of wealth.

MELJUN CORTES
Meljun

- defined as the science which deals with the

activities of man in obtaining wealth for the satisfaction of his wants.

Economics – is a science & its method are scientific; it is a classified and systematized Body of Knowledge. - deals primarily with the Activities of MAN in obtaining Wealth for the satisfaction of his WANTS.

Principles of Economics
What are the relationships of Economics to the Social Sciences:
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1.) Economics and History 2.) Economics and Sociology 3.) Economics and LAW 4.) Economics and Ethics 5.) Economics and Political Science 6.) Economics and Psychology

Principles of Economics
What are the relationships of Economics to the Natural Sciences:
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1.) Economics and Chemistry 2.) Economics and Geology 3.) Economics and Physics 4.) Economics and Biology

Principles of Economics
Fundamentals Institutions of The Present Economics Systems:
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1.) Private Property 2.) Competition 3.) FREE Enterprise 4.) Cooperative

Principles of Economics

Divisions of the Field of Economics:

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1.)PRODUCTION 2.)EXCHANGE 3.)DISTRIBUTION 4.)CONSUMPTION

Relationships of Economics to that Social Sciences:

Principles of Economics
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Is a social sciences & deals with Economics Life of MAN living in Society. Every industry is dependent upon other industries in one way or another. The relationship of MAN to Wealth either as a Producer or as Consumer is a SOCIAL ACTIVITY.

Principles of Economics

ECONOMICS and History

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A knowledge of industrial and Economics History is indispensable to the Economist who desires to understand present’s Institutions and Problems in the Society.

Principles of Economics

ECONOMICS and Sociology

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The problems of LABOR, the costly strikes, unemployment, long hours of Work, child labor and social insurance Are the concern of both Sociology and Economics

Principles of Economics

ECONOMICS and LAW

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LAW are nothing but the crystallization of long-continued social usages and customs. LAW may direct the forces of economics life for a while, they cannot continue for a long time if they run on economics practices.

Principles of Economics

ECONOMICS and Ethics

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Ethics – science of Moral, like the other social sciences is related to economics. All individual CODES of Morals are the out growth the of the social code of morals. The conception of right or wrong exists only in society in the conduct of MAN as a Social Being.

Principles of Economics

ECONOMICS and Political Science

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Political Science – the study of STATE organization has its Economics Aspects. The problems of Taxation are both Economic & Political. With the present tendency all over the world for government to regulate or go to into between political science & economics becomes more Evident.

Principles of Economics

ECONOMICS and Psychology

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Economics is a study both of man and of Wealth. The human side of economics is approached chiefly through Psychology. Psychology – teaches that Man is a bundle of INSTINCTS. Ex. Sex Instinct or instinct of curiosity Business Psychology Employment Psychology

Principles of Economics

ECONOMICS and Chemistry

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-Most business concerns today make use of Chemical Tests to ascertain & determine the quality of materials which enter into the productive process. -Chemistry has given Mankind many industries.

Principles of Economics

ECONOMICS and Geology

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-The exploitation of our mineral Wealth depends to a large extent upon the discoveries & investigations of the Geologist. -Geology – furnishes the information as to the location probable quantity and estimated value of our Wealth hidden beneath the surface of the earth.

Principles of Economics

ECONOMICS and Physics

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-Physics the science that treats if Matter & energy especially of Mechanics, Heat, Sound, Light & Electricity. -Physics, the Engineer who directs our industrial Production must rely on the Information furnished by Physics. -Electrical Engineering has reshaped many of our methods of production.

Principles of Economics

ECONOMICS and Biology

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-Biology –science that deals with the origin, structure & function of plans & animal has revolutionized our agriculture -and animal industry. -Biology – furnished the necessary information to veterinarians to fight the -Enemies of our animal resources.

Principles of Economics

Institutions
Defined as widely prevalent & highly standard social habits of Man.

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Private Property

Principles of Economics
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Ownerships Economics progress is closely bound up with the institutions of Private Property. Takes many forms and include not only Food, Clothing and Land but also all forms of Real Estate and Exclusive Privileges.

Competition

Principles of Economics
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-Progress is intimately bound up with competition and economics society From the very beginning has been influenced by this fundamental institution.

Competition , among producers of economics goods results in more efficient methods of production in an endeavor to reduce costs. Competition – exists not only among sellers but also among buyers Competition – exists among nations of the same stage of economics development as well as in different stages of progress.

FREE Enterprise

Principles of Economics
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freedom to engage in all sorts of enterprise has been responsible for economic progress. the era of free enterprise known by the characteristics phrase LAISSEZ-FAIRE

Cooperation

Principles of Economics
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-Competition among sellers has led to the formation of associations among them. Cooperation among buyers of consumers also exists in many advanced countries today. Cooperation – Cooperative stores are manifestation of the Cooperative movement among consumers. Collective Buying – is always much cheaper then when consumers buy separately. Competition & Cooperation exist side by side. Competition and Cooperation are the cause for the great economic activity.

Cooperation may be the result of competition. Both competition and cooperation progress in the world today.

Principles of Economics

PRODUCTION
Production – deals with the factors necessary in the creation of wealth. These FACTORS:

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1.) LAND 2.) LABOR 3.) CAPITAL 4.) ENTERPRISE

EXCHANGE
-

Principles of Economics
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is chiefly devoted to the consideration of value & price, principles of money, credit & Banking & their relation to price and the exchange of goods are subjects included in this division.

Distribution

Principles of Economics
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- is that division of economics that deals with the apportionment of the social income or national dividend among the different factors That cooperation in production.

- used in economics theory should not be confused with marketing or the processing of goods from the producer to the buyers or consumers

Consumption

Principles of Economics

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-Deals with the utilization of goods and services in the satisfaction of human wants.
PRODUCERS is also a CONSUMER but consumption as a division of economics refers specifically to the utilization. CONSUMPTION - a Producer is also a consumer but consumption as division of economics refers specifically to the utilization of finished goods by the ultimate consumer.

Economics Business

Principles of Economics
and
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The business man especially is concerned in his Work with the Subject-matter of economics. A man may be successful in business, but it does not necessary follow that he is a Good ECONOMISTS. Economists – defined as the science of business. Economics principles have been formulated from facts provided by business & the subject-matter of Economics consists to a large extent of the problems of business.

Economics Citizen

Principles of Economics
and
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Either as a WAGE-EARNER or as an Employer, the Filipino Citizen is deeply concerned with the production & distribution of wealth. Every person is a part of the economic system & everyone is in contact with economic phenomena in one way or another, so that it inevitable that we are all students of economics.

Economics State man

Principles of Economics
and
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-The state man is confronted with a variety of economics, upon the solution of which often depends his PRESTIGE and success in public life. Peace time problems for the state man include those for Financing the normal activities of Government.

Principles of Economics
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Fundamental Economic Concepts

Principles of Economics

Fundamental Economic Concepts:

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Goods & Utility
anything that satisfies HUMAN WANTS .

Goods -

Principles of Economics

Goods -

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anything that

satisfies HUMAN WANTS .

GOOD – has a broad meaning. Ex. Material thing – commodities Im-materials thing – services - common terms of Economics. - It is an all-inclusive term and embraces all kinds of commodities as well as services. - the SERVICES of physician, a lawyer or a teacher satisfy HUMAN WANTS just as much as concrete and tangible objects such as Cell phone, Laptop, GF. - Services are immaterials GOODS while the Commodities are materials GOODS example Sardines, Corn Beef

Utility -

Principles of Economics
the quality of a thing that
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Utility –

satisfies DESIRE. All goods possess some qualities or attributes that are capable of satisfying some one or other of our numerous DESIRES or WANTS.

is an Abstract concept; it

is not attached to the thing like a Physical Quality. - It is subjective not objective. - is not inherent in the object which it makes Desirable. It comes into existence only because DESIRES appear & it passes out of existence when the DESIRES disappear or die out. A thing not wanted by Man has no Utility.

Utility & Human WANTS
Now WANTS are not always

Principles of Economics
Meljun

-- It has been observed that Utility comes into existence because of the presence of WANTS.

inborn in MAN; there are certain

wants that appear because of the relation of MAN with his fellowmen. The individual aspect of UTILITY is not only due to the difference in the DESIRES, tastes and feeling of MEN but also to the differences in the MONEY incomes or the ability of individuals to satisfy their DESIRES. Utility is a quality not only of material things but also of immatrials goods like SERVICES, DEEDS, BEHAVIOR.

Utility & Human WANTS

Principles of Economics
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UTILITY depends upon the individual inasmuch as MEN differ in their TASTES and DESIRES. Things have different appeals to different individuals.

The mere recognition that a thing is useful does not infuse the thing that WANT-GRATIFYING quality called UTILITY. The thing recognized as being useful must also be capable of being used.
All thing that no increase in MAN’s WELL-BEING, but if found out that are undiscovered and unused, also danger to the MAN then these thing have no UTILITY.

FREE GOODS

Principles of Economics
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Free Goods exist only in certain places and not everywhere. Example of these are air; water; sunlight; these things are gifts of nature and any body can enjoy them in almost any quantity. Man enjoy these FREELY then this is FREE GOODS.

ECONOMIC GOODS

Principles of Economics
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If goods are scare, they must be paid for; they command a price. Few of the things that satisfy HUMAN WANTS are FREE. Most of the things we need are SCARCE and can be obtained only by the exertion of effort. Goods that are SCARCE are called ECONOMIC GOODS. The ability to command a price is the mark of Economic Goods. If goods are scarce we must ECONOMIZE in their use; Generally, Nobody ever Economize in the use of sunshine or air or water in the open spaces.

Principles of Economics
Fundamental Economic Concepts: Economic Terms for Scientific Analysis: Good Wealth Utility Money Human Wants Public Wealth Free Goods Private Wealth Economics Goods Capital Income Scarce
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Principles of Economics
Fundamental Economic Concepts:
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INCOME = Consists of the goods & services resulting from the productive activities of the people.

Principles of Economics
Fundamental Economic Concepts:
Materials Goods/Income of a person – include all those things such as clothing, foods, houses, machinery, boats, ca, rice, other forms of property. - finals forms ready to be used up or consumed immediately.
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Principles of Economics
Fundamental Economic Concepts:
Immaterials Goods/Income of a person – consists of such diverse things as the services of servants example: teacher’s instruction physician’s consultation nurse’s care taking
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Principles of Economics
Fundamental Economic Concepts:
Money Income – enables a man to procure both material & immaterial goods. - is a free & it could be used to any form of income
desired at any time. Ex. Automobile
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2 Specialized Forms of Income: 1.) Materials Income 2.) Immaterials Income

Principles of Economics
Fundamental Economic Concepts:
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Fluidity of INCOME:
-Income is often defined as an INFLOW of satisfaction from Economics Goods. Ex. Nation’s Wealth – utilized in many ways & out of this Utilization. MONEY INCOME – person who received income & if the income is saved. Example: Buying stocks/bonds; invested in a mortgage Money Deposited in a Bank.

Principles of Economics
Fundamental Economic Concepts:
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Different Kinds of INCOME:
4.) Gross Income 5.) Net Income 6.) Individual Income 7.) National Income

-Income from CAPITAL comes in many forms: 1.) Money Income - Income is usually reckoned in terms of 2.) Real Income MONEY. 3.) Psychic Income

Principles of Economics
Fundamental Economic Concepts:
1.) Nominal Income – income is expressed in terms of money. - it is a Money Income. 2.) Real Income – these are materials goods in the forms of clothing ; rice; meat; vegetables & other concrete objects. Ex. Standard of Living
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Principles of Economics
Fundamental Economic Concepts:
3.) Psychic Income – desirable results produced
1.) Salary of Man public esteem job satisfaction 2.) Men invest money on a beautiful home.
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in the realm of feeling by valuable objects or by valuable changes in the environment which Accrue to or affect an economic within given period.

Principles of Economics
Fundamental Economic Concepts:
** A large money income does not always mean a large measure of Well-being on the part of the receives for if prices are high relatively small quantities of goods can be bought with even a large money income. ** Money is only a means to an end; it is used to purchase those desirables objects that are essentials to well-being.
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Principles of Economics
Fundamental Economic Concepts:
4.) Gross Income – means the total receipts that he receives within a certain period of time. example: acquisition of INCOME
expenses are incurred Profits – cannot be ex. Sari-Sari Store – TOTAL RECEIPTS determined by looking at the gross keeping books of income alone. Expenses must transactions be deducted.
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Principles of Economics
Fundamental Economic Concepts:
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5.) NET Income – is an income after deducting all operating & administrativ expenses; taxes. Net Income of Wage Earner - is the thing that counts & just as in the case of the individua it is not the amount that he earns but the amount that he

saves that determines his real worth.

Principles of Economics
Fundamental Economic Concepts:
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6.) Individual Income – the aggregate monetary income of the individual is larger than the value of the National Product. ex. Profit of the Seller/Wholeseller Employee Net Take Home Pay 7.) National Income – is not always equal to the sum of individual income. ex. Philippines Income

Principles of Economics
Fundamental Economic Concepts:
INCOME OF THE PHILIPPINES: - What constitute the Total Wealth of the Philippines. It is desirable also to know what is the TOTAL NATIONAL INCOME from year to year to determine whether the country is growing Richer or Poorer.
Meljun

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