THE DISCIPLINE

OF ECONOMICS
economics
■ Its origin could be traced back to its ancient two
Greek words oikos and nomos
■ Oikos means house
■ Nomos means custom or law
■ It was used to refers to the discipline that studies
the interaction of economic agents and the
systems in which they perform their transactions.
THE DEVELOPMENT
OF ECONOMIC
THOUGHT
CHANAKYA
(350-C.275 BCE
Published his treatise title
arthashastra (the science of
wealth).
He argued that a states
well being is
interdependent with the
populace’s experience of
being well.
ST.THOMAS
AQUINAS ( 1225-
1274)
An Italian theologian and
philosopher, discussed the
concept of “just price” in his
woRk summa theologica.
He argued that merchants
should sell their products at fair
or just prices to make them
affordable to the consumers.
MERCANTILISM

■ Coined by marquis de Mirabeau in 1743.

■ Which allowed a strict government regulation of
trade within its territories.
■ It was characterized by the implementation of
tariffs and heavy exportation of products.
THOMAS MUN
(1571- 1641)
He was an English economist.
Was a supporter of the mercantilist
paradigm.
He proposed in his work a discourse
of trade from England unto east
indies (1621) that England should
increase prices in order to gain more
profit from its economic activities,
which included importation of raw
materials and exportation of
products.
ADAM SMITH
(1723-1970)
He was a Scottish philosopher and
probably the most influential and
popular classical economist.
He produced the first modern work
on economics: The Wealth of Nations
(1776).
He promoted the concept of free
market and argued that the self
interests of individuals promote a
healthy competition in the market.
ALFRED
MARSHALL
(1842- 1924)
He was a British economist and
one of the major critics of
Adam Smith.
In his work Principles of
Economics (1890) he
highlighted the importance of
analyzing the individual’s
action in relation to his or her
material environment.
ALFRED
MARSHALL
(1842- 1924)
He defined economics as “a
study of an in the ordinary
business of life. It enquires how
he gets his income and how he
uses it. Thus, it is on the one
side, the study of wealth and on
the other and more important
side, a part of the study of
man.”
THOMAS
MALTHUS
Malthusian Theory of
Population- the
continuous increase of
population also
demands an increase in
production, which
increases the labor
force.
THOMAS
MALTHUS
He claimed that the
heightened demand for
more products will
necessitate the use of
uncultivated lands to
produce more food, or even
exhaust all potentials from
lands that were already
cultivated.
DAVID
RICARDO (1772-
1823)
He was an English economist,
proposed in his work 0n the
Principle of Political Economy
and Taxation (1817) that
importation of products maybe
a sustainable and efficient
solution to resolve the growing
demand of the public vis-à-vis
the incapability of the
production sectors to address
those needs.
DAVID
RICARDO (1772-
1823)
He suggested the concept of
specialization, wherein a
country must produce goods
that is most competent with
and import goods that it does
not specialized on.
THE FIELDS OF
ECONOMICS
Microeconomics and Macroeconomics

The primary difference between these two

approaches in economics is the scope of their
analysis.
Microeconomics

■ Focuses on small- scale market interactions that

transpire between individual consisting business
firms and households.
■ These interactions may include buying of products by
a household from markets and the eventual
participation of these households in the market
system through labor and other services.
macroeconomics

■ Focuses on analyzing the determinants of

national income.
■ John Maynard Keynes(1883-1946) a British
economist, is one of the key theorists in the field
of macroeconomics.
macroeconomics

■ John Maynard Keynes(1883-1946) a British

economist, is one of the key theorists in the field
of macroeconomics.
■ He presented the concept of consumption
function, which is a mathematical equation that
computes consumer spending within an economy
Mainstream Economics and Heterodox
Economics

The difference between the two approaches is their

assumptions on economics interplays of variables
and agents.
Heterodox Economics

■ It focuses on the interconnection of concepts like

institutions, history, and social structure.
■ It commits itself to an analysis of the nature of
systems and individual which allows for an
examination of social reality as intrinsically
dynamic and organic.
Mainstream Economics

■ Focused on understanding the interconnection

between the concepts of rationality,
individualism, and equilibrium.
■ Humans participate in economic activities
based on some precalculated cost and benefit
of doing so.
Economic Theory and Applied
Economics
Economic Theory

■ It is an umbrella term that refers to the explanation

and understanding of the processes and interactions
related to the production and consumption of goods
within the market system.
■ It aims in creating theories and formulas that can
help explain how the economic system works on
the macro and micro scales.
Applied Economics

■ It utilizes economic theories and formulas to real

world scenarios with the goal of predicting
possible events and outcomes.
■ The predictions are important in the formation
of economic policies that would affect the
individuals within that economic system.
Positive and Normative Economics

The difference in these two field lies in

their function.
Positive Economics

■ It is viewed as the descriptive form of economics

wherein its chief aim is to describe and explain
economic phenomena or behavior.
Normative Economics

■ It is associated with welfare economics, as it is

focused on providing explanations and
arguments on how economic policies should be.
KEY CONCEPTS IN
ECONOMICS
market
■ Literally, a place where exchange between consumers
and sellers transpire.
■ A system where such exchanges of goods take place.
■ A theoretical arena where sellers compete for the
patronage of customers.
■ The market is an arena where consumers and sellers
are independently interacting for goods which are
priced equally due to the ongoing competition among
sellers.
Supply and Demand
■ SUPPLY refers to the entirety of available goods that
the market can offer, while demand represents the
actual quantity of goods or services that the public
requires from the market.
Specialization
■ It refers to a method in production where in the
process of producing goods and services in
concentrated to particular group of individuals or
region.
production
■ It is the process wherein raw materials are
transformed into usable goods or commodities.
■ The elements of production include land, labor,
capital and entrepreneurship.
RESEARCH METHODS
Behavioral Economics
■ It provides analysis that fuses economic
principles with psychological framework.
Classical Economics

■ This approach maintains that the market

must be free from intervention for it to
have a dynamic and self- perpetuating
trajectory.
Computational Economics

■ It involves the development of

mathematical methods with the aid of
computers.
Econometrics

■ It was coined by Pawel Ciompa in 1910

and establish as a discipline in 19366
through the efforts of Ragnar Frisch.
■ It is oriented toward the analysis of
economic data using mathematical and
statistical methods.
Evolutionary Economics

■ It adapts to novelty and innovation

within economic systems as part of the
development process.
Experimental Economics

■ It utilizes laboratory experiments to

analyze the applicability of theories in
real- life situations.
Praxeology

■ The chief arguments of praxeology is that

human actions are done based on a
calculated purpose or objective.
 CURRENT
APPLICATIONS OF
ECONOMICS
Economics of Education

■ This field of economics considers the

impact of education as a key point in
analyzing the economic behavior and
potentials of individual or groups.
Environmental Economics

■ The process involved in the harvest and

transfer of raw materials and products
entail consequences to the environment.
Welfare Economics

■ This field focuses its analysis on the

equitable allocation of resources and
goods among the populace, which in
return affects social welfare.