Economic

Institutions
 Economic Institution is
the formal and informal
rules that organize the
economic flow and
activity of a society.
 How important are
the economic
institutions in the lives
of the people in
society?
 According to North (1990),
institutions provide humanly
devised controls and
limitations that shape contact
and exchange of information
amongst humans within a
society.
 Economic Institutions are formed
either informally
when individuals and/or organizations
interact with one another and establish
expected norms and behaviors, or
formally through deliberate
establishment or design (this is usually
done by the government or a private
enterprise).
 Economic institutions aid in
strategizing and deciding the
flow of production,
consumption, and distribution
of goods and services of a
society to ensure that each
individual's needs are met.
According to Oeuduvideos
(2013), since resources are
limited and scarce,
Economic Institutions are
tasked to answer the
following questions:
1.What goods and services be
produced?
2.How should these goods
and services be produced?
3.For whom the goods and
services be produced?
Aside from this main function
of an Economic Institution,
other functions and aspects of
economics are needed to
ensure a stable and working
society and community.
Transfer and
Redistribution
 Transfer
- Payments that are made
without any good or service
being received in return.
-Also known as “government
transfer” or “transfer payment”
Examples of transfers are rooted from
public spending such as pensions and
welfare benefits. Donations and prizes
to lottery winners are also transfers
but mostly come from the private-
sector. One form of transferring
wealth and income is by redistributing
it.
Redistribution is the process
of transferring income and
wealth- be it in the form of
money, physical property, and
the like- from one individual
to other individuals.
 Example:
When the government takes
the money form public taxes
and uses that to create projects
to supposedly assist and help
the poorer citizens of the
society.
 Market
Transactions
 -Market Transaction is
basically the system of exchange
in a market. It is when goods
and service are traded and
bartered amongst individuals
within their market and society.
-Also called Financial
Transactions