FC 10: HEALTH ECONOMICS

Introduction to
Economics
Chapter 1
 TODAY'S LESSON
I. Economics Defined
Discussion Outline II. Importance of Studying Economics
III. Branches of Economics
IV. Methodologies of Economics
V. Basic Economic Concepts
VI. Basic Economic Problems
- What to Produce?
- How to Produce?
- For whom to produce?
 I. Introduction to Economics

I. What is Economics?
QUEEN OF THE SOCIAL SCIENCES

-Economics is unique in analyzing various areas of

human behavior. It utilizes different tools and
methodologies in analyzing and solving social problems,
compared to the other social sciences.

-Greek word ‘oikonomia’ , which means the

management of a family or household.
Adam Smith’s Wealth Definitions of Economics
Definition

Alfred Marshall’s
Welfare Definition Economics is “the study of the proper allocation and
efficient use of scarce resources to produce commodity
Lionel Robbins’ Scarcity
for the satisfaction of unlimited needs and wants of man.”
Definition

Paul Samuelson’s Growth-

Oriented Definition

I. Introduction to Economics
I. Introduction to Economics

II. Importance of Studying

Economics
1. Understand how goods or resources are produced and properly
allocated to society.
2. Understand the behavior and roles of the different individual
decision-makers: the households, firms,
and the government.
3. Explain how the national or global economy operates.
4. Know the forces that affect the dynamics of any market.
5. Understand economic issues and trends.
I. Introduction to Economics

COVID-19 PANDEMIC
>Health Crisis
>Economic Crisis
 III. BRANCHES OF ECONOMICS

Microeconomics Macroeconomics

-Microeconomics is the branch of Economics that is -Macroeconomics is focused on the overall

concerned with the behavior and decision-making of structure and performance of the national or
the individual players in the economy, such as the global economy. It is concerned with the analysis of
consumers, businesses, and the government. aggregates or the economy as a whole.

III. Branches of Economics

BRANCHES OF ECONOMICS

III. Branches of Economics

 IV. Methodologies of Economics

Positive Economics Normative Economics

-It incorporates ethics and value judgments about
-refers to the analysis of economic behavior that
what the economy should be like or what particular
uses economic theory and empirical analysis to
policy actions should be recommended to achieve a
explain what is or what happened.
goal.

-It seeks to predict and explain economic

-It seeks to answer the question, what ought to be?
phenomena and describes facts and data in the
economy.

IV. Methodologies of Economics

 IV. Methodologies of Economics

APPLICATION
IDENTIFY WHETHER THE FOLLOWING STATEMENTS ARE NORMATIVE OR
POSITIVE:

1. The GDP of the Philippines is lower than that of Singapore in 2018.

2. Every Filipino ought to have equal access to freedom of expression.
3. The Philippine government should not tax online businesses.
4. If the government cuts taxes, then the supply of cigarettes will rise.
5. It is right to spend on social works more than the public works.
 IV. Methodologies of Economics

APPLICATION
IDENTIFY WHETHER THE FOLLOWING STATEMENTS ARE NORMATIVE OR
POSITIVE:

1. To regulate health care expenditure of the country, the Philippine government should implement the
national health program similar to that of developed countries like United States, United Kingdom, and
Canada.
2. Environment Protection Agency study shows that exposure to second-hand smoke causes 3,000 lung
cancer deaths per year in nonsmokers.
IV. Basic Economic Concepts

Basic Economic Concepts

1. Wants versus Needs
2. Goods and Services
3. Economic Resources
.
IV. Basic Economic Concepts

• The economic fact of life stresses that wants are unlimited, but the resources available to
satisfy them are scarce.

Wants Versus Needs

• Wants are desires or unnecessary • Needs refer to the things that are vital
things that can be fulfilled by for survival like food housing, and
consuming a good or service. clothing.
• It also include things that people need
to have in order to live a healthy and
happy life like education,
transportation, medical care, and job
security.
 Goods and Services
GOOD SERVICE
a tangible commodity that is used to satisfy human wants, -It is the intangible equivalent of a good that also brings
which can be purchased and satisfaction to human wants.
consumed. Services are activities or tasks that people provide for
others’ demands.
MEDICAL GOODS
blood pressure monitoring equipment, ECG machines, MEDICAL SERVICES
vitamins, anti-depressant drugs maternal care services, home for elderly persons
 V. Economic Resources
-Inputs or factors of production
-Economic resources are the inputs or resources used in the production of goods and services.

LAND LABOR CAPITAL ENTREPRENEURSHIP

▪ This refers to naturally ▪ It refers to the time, This covers the tools and other ▪ This is the human resource
occurring materials of physical and mental skills productive equipment utilized responsible for combining or
the Earth that are used for that people contribute in in producing consumer goods organizing the land, labor,
the production of goods producing goods and and services. and capital resources into a
and services. services. good or service.
-Financial capital, assembly
▪ This is the physical space ▪ Specialist form of labor
plant, factory building,
or area on which ▪ Nurse input
distribution facilities, computers
production takes place.
▪ RENT ▪ WAGE ▪ PROFIT
INTEREST
Patients with cardiac pathology normally go to a hospital to see a
cardiologist. Usually, in practice we ask for an appointment from a
receptionist before the cardiologist could look into the patients’ complaints
and he might use medical instruments such as stethoscope to listen to the
heart beats before prescribing proper medication to treat a specific disease.

.
 V. BASIC ECONOMIC PROBLEMS
WHAT TO PRODUCE AND IN WHAT QUANTITIES?

HOW TO PRODUCE?

FOR WHOM TO PRODUCE?

 1 WHAT TO PRODUCE AND IN WHAT
QUANTITIES?

Scarcity
-a situation where there is an insufficient or limited amount of Scarcity and Rational
resources available.

“There is no such thing as a free lunch.”

Choice
Choices are necessary because resources are
-every choice entails costs. These costs may
scarce.
take in the form of time, money, or something
that is valued.

OPPORTUNITY COST
 III. Core Principles

Opportunity Cost
In economics literature, the act of giving up one thing in order to get something
else is called TRADE-OFF.

Boyes (2008) defined OPPORTUNITY COST as the highest-valued alternative

that must be forgone when a choice is made.
 III. Core Principles

Opportunity Cost

The first problem deals with ALLOCATIVE EFFICIENCY, or the condition in which the optimal amount
of output is produced given the underlying structure of social benefits and costs.
 2 HOW TO PRODUCE?

This question involves decisions about what production

methods or techniques to use and how
economic resources are to be combined in producing the final
Production
output.
Efficiency
Production efficiency refers to a condition in
which one activity either production or
Goods and services must be produced with consumption cannot be increased without
a minimum input without sacrificing the reduction on another activity because the
quality. maximum amount of output is produced from a
finite amount of inputs.
 3 FOR WHOM TO PRODUCE?

The last question involves decisions on how goods and

services are distributed among members of society. Equity
FC 10: HEALTH ECONOMICS

Introduction to
Economics
Module 1