ECONOMICS 111

introduction

PROF. ISIDRO APOLLO G. VALENSOY, JR.

 IMPORTANCE OF ECONOMICS
• CONSUMER/HOUSEHOLD
• To minimize spending (cost) and maximize
satisfaction from individual/family budget.
• PRODUCER/SELLER
• To minimize production expenses (cost) and
maximize profit from limited resources.
• GOVERNMENT
• To maximize nation’s production by proper
allocation of resources and maximize people
satisfaction by providing excellent services
from the budget allocated to different
agencies (DepEd, DOH, DPWH, etc.) for the
benefit of all sectors of society.
 What is Economics?
• “An inquiry into the nature and causes of the
wealth of the nations.” (Adam Smith)
• “It studies how man obtains income and how
he uses this income.” (Alfred Marshall)
• “A scientific study that deals with how
individuals and how the society generally
makes choices.” (Gerardo Sicat)
• Scientific study
• Proper allocation, utilization, and effective use
of resources
• Satisfaction of (innumerable) human wants
given the available (limited) resources
Why is there a need to make a
CHOICE?
 Nature of human WANTS…
• People have NEEDS to fulfill in order to survive
or live.
• But they normally have wants, too, to satisfy.
• And human wants are INSATIABLE.
 Nature of RESOURCES…
• Humans consume GOODS/SERVICES in
order to satisfy their wants…
• But goods/services will require the use
of ECONOMIC RESOURCES in order to
produce them
• And the amount of resources available is
generally LIMITED in supply.
 MAKING THE CHOICE…
• For an individual consumer (assuming that he
is rational), it is not just a matter of picking
WHAT good to buy…
• The act of making the choice involves deciding
HOW he must spend his income (resource)
relative to the prices of the goods in the
market
• It also includes WHEN and WHERE to buy the
good.
 For a producer or seller…
• It is not just simply producing goods on a
random basis…
• It involves deciding WHAT goods are in
demand in the market
• It involves deciding HOW goods must be
produced
• It involves deciding WHEN and WHERE goods
must be produced.
 For the ECONOMY as a whole…
• WHAT to produce?
• HOW MUCH to produce?
• HOW to produce?
• FOR WHOM to produce?
• WHEN and WHERE to produce?
WHY CONSIDER MAKING THE BEST
CHOICE?
 ALWAYS REMEMBER…

THINK…,
BEFORE YOU
ACT!