Revisiting Economics as a

Social Science
Specific Objectives

1. Define economics
2. Determine the importance of
economics
3. Describe the nature of economics
Economics
• Study of what constitutes rational human
behavior in the endeavor to fulfill needs and
wants
• Understanding how society allocates its scarce
resources
• Almost always, human activities involve
economics
Definition of Economics from Different
Perspective
Definition of Economics from Different
Perspective
Economic activities

•Earning money
•Buying goods and services
•Depositing and withdrawing money in
bank
Economics as defined
Economics as a Social Science

•Economics is classified as a social

science because it deals with the
study of human’s life and how he
lives with other men.
Divisions of Economics
Divisions of Economics
1. Production – refers to the process of producing or
creating goods needed by the households to satisfy
their needs
Factors of production – inputs
Goods and services – outputs
Factors of Production
Goods
Services
Divisions of Economics
2. Distribution – refers to the marketing of goods and
services to different economic outlets
3. Exchange – refers to the process of transferring
goods and services to a person in return for something
present medium of exchange - money
Divisions of Economics
4. Consumption – refers to the proper utilization of economic
goods. However, goods and services could not be utilized
unless you pay for it. Hence, consumption could also be
spending money for goods and services
5. Public Finance – pertains to the activities of the government
regarding taxation, borrowings and expenditures. It deals with
the efficient use and fair distribution of public resources.
Factors of production
20th century
1. Land
These resources consist of free gifts of nature
which includes:
- soil
- rivers
- lakes, oceans
- forests
- mountains
- mineral resources
Factors of production
20th century
Land is considered an economic resource because it has a price attached
to it.
• we usually pay for it through rent or lease

Land is a limited resource.

Physical land is a fixed resource.
Factors of production
20th century
2. Labor
- Also called “human resources”
- Labor- refers to all human efforts, be it mental or physical, that help to
produce satisfying goods and services.
- In return, he earns an income in forms of wages and salaries.
Factors of production
20th century
Labor is a flexible factor of production

- workers can be allocated to different areas of the economy for

producing goods and services
Factors of production
20th century
3. Capital
Two economic definitions of capital:
a. Capital – can represent the monetary resources use to purchase
natural resources
Ex: Companies use capital to buy land and other goods
Two economic definitions of capital:
b. Capital – represents the major physical assets individuals and
companies use when producing goods and services
Ex: buildings, vehicles, equipment
Factors of production
20th century
Income derived from capital is interest
Factors of production
20th century
4. Entrepreneurs
- French word which means “enterpriser”
- Entrepreneur – organizer and coordinator of other factors of
production: land, labor and capital.
- He uses his initiative, talent and resourcefulness to create economic
goods.
5. Foreign Exchange
- Refers to the dollar and dollar reserves that the economy has.
- Foreign exchange is part of economic resources because we need
foreign currency for international trading and buying materials from
other countries
International medium - dollar
LET’S TEST
OURSELVES!
A. 1. Economics is derived from the Greek word “oikanomia” meaning:
a. Economic management
b. Household management
c. Social management
2. Economics is a social science because it deals with:
a. Human nature
b. Natural resources
c. Experimentation
LET’S TEST
OURSELVES!
3. Scarcity of resources means:
a. minimum resources
b. excess resources
c. shortage of resources
d. no resources
4. These are examples of human wants except:
a. smartphone
b. perfume
c. watch
d. clothing
LET’S TEST
OURSELVES!
5. Give your definition of economics.
B. Identify what type of economics (Macro or Micro) discusses the ff:
1. Gross National Product
2. Price of bananas
3. Profits of Bread and Butter
4. Employment