MODULE 1: INTRODUCTION TO ECONOMICS

AND THE TYPES OF ECONOMIC SYSTEM

P R E S E N T E D B Y:
D R . E RW I N C R U Z
OBJECTIVES:
•Dissect the types of economic structure.
•Analyze the benefit and problems of capitalism and
socialism.
•Develop an attitude of resilience.
INTRODUCTION
This module explains the economic structures of
capitalism, socialism, mixed economy and
traditional economy. All of these economic
classifications have an attempt to attain their
established social values and objectives commonly
the economic stability, economic efficiency,
economic growth and development.
 DEFINITION ECONOMICS
Economics is a branch of social sciences that deals with the creation
and utilization of goods and services.
Economics is primarily concerned on how people, private business
firms and political institutions utilize their available resources.
Economic system refers on how the government or society establish
and allocate the limited number of goods, services and available
resources of the country. Economic system control the elements of
production, such as capital, human resources, and natural resources.
Therefore, economic system classified into capitalism, socialism, mixed
economy and traditional economy.
IMPORTANT TERMS IN
ECONOMICS
•Economic Growth
•Economic Development
•Micro economics
•Macro economics
CAPITALISM
Capitalism refers to economic system that production of
goods and services are owned and managed by the private
firms. Furthermore, capitalist refers to the financier,
investor, or industrialist who uses money as their capital to
establish business or it will invest in trading and industry.
In capitalism, the country is open for foreign investors and
foreign business partnership.
CAPITALISM
In the Philippines as capitalist country, the president
visited different world leaders particularly the allied
countries to strengthen the business partnership of the two
nations. Furthermore, the Philippine government
encouraged foreign investors including local citizens to
establish their own enterprise.
CAPITALISM
In capitalism, the government set business laws, rules and
regulations to regulate the businesses for the protection of the
consumers and also the business owners. If the businesses will grow
it helps the government to maximize the resources and economy, it
promotes business competitions which are in favour on the part of
consumers such competition also avoid monopoly that will control
the entire market.
Furthermore, it helps to improve the economy, generate more
employment for the people, and it will create additional taxes to be
used by the government for public services.
SOCIALISM
Socialism is part of economic system wherein the
manufacture of products, dissemination and trading must
be operated and owned by the state. In socialism, huge
businesses like telecommunication, electricity and
airline industry are usually owned and managed by the
government. On this concept, it ensures that the
primary services needed by the community are given
and people are not deprived for better services.
SOCIALISM
The products and services of huge businesses are
affordable because it is controlled and managed by the
government. Furthermore, the major objective of
socialism is to avoid personal profit and for a certain
extent of work for the collective good. In this concept,
individuals are discourage not to compete with each
other for personal gain and profit, instead they will
work together for the good of everyone.
SOCIALISM
In comparison, if the country is capitalism like in the
United States of America, and South Korea, the state let
the private businesses to help the nation’s economy, but in
socialism like in Cuba and Germany, the state controls
the entire economy.
MIXED ECONOMIC SYSTEM
Mixed economic system characterized by combined two
market system. Furthermore, mixed economic system is
usually known as dual system. More western countries
follow the concept of mixed economic structure. Under
this kind of economic classification, most businesses are
owned and managed by the private firms, while others
are primarily for public services and under the
authority of the government.
MIXED ECONOMIC SYSTEM
Furthermore, Mixed economic system are globally
popular. Purportedly, mixed economic system is a
combination of free market system and command
economy. The said two economic structures have the best
features of economic framework. Nevertheless, in
practice, mixed economic system face the challenges of
looking for correct balance between economic freedom
and more in control by the government.
TRADITIONAL ECONOMY
Compare to the other classification of economic system,
traditional economic system is considered the very basic
and the most prehistoric. Traditional economy is
referring to the number of produced goods and services
including work. These are relying on a lot of people and
there is very slight division of manpower or expertise.
TRADITIONAL ECONOMY
There are parts of the world still practising traditional economic
system. It is usually located in rural set-up in communist bloc or in
developing countries, wherein economic activities are primarily
fishing, farming or other traditional source of income. There are
typically short or lack of resources to share in the communities in
the traditional economic system. However, because of its
primitive in nature, traditional economic system is highly
maintainable. Furthermore, due to its small production, there is
very little waste or unused compared to the other economic
systems.
QUESTION AND ANSWER
LIFE LESSON
Appreciate all the sacrifices and efforts of your
parents, just to make your life becomes better…
If you love somebody, better tell them while
they are here.

Dr. Erwin Cruz

WORD OF WISDOM
Gratitude is Riches, Complain is Poverty.

Dr. Erwin Cruz

BIBLE VERSE
Namuhay kayo noon ayon sa takbo ng sanlibutang ito at sumunod
sa pinuno ng kapangyarihan ng himpapawid, ang espiritung
kumikilos ngayon sa mga anak ng pagsuway. – Efeso 2:2
Kayo’y sa inyong Amang Diablo, at ang mga nasa inyong ama ang
ibig niyong gawin. Siya’y isang mamamatay-tao buhat pa nang
una, at hindi nanatili sa katotohanan, sapagka’t walang katotohanan
sa kanya. Pagka nagsasalita siya ng kasinungalinagan, ay
nagsasalita siya ng sa ganang kaniya: sapagka’t siya ay sinungaling
, at ama nito. –Juan 8:44
THANK YOU!