APPLIED ECONOMICS
Oikonomus – Household management
Oikonomikus – social science – deals with
limited resources
>Great Economists<
1. Aristotle – property should be in private;
take care of your property
2. Thomas Aquinas – Middle ages; priest,
philosopher, economist; Just price concept
3. Duns Scotus- Benefit from trade is a MUST
> Mercantile System – gold has value
4. Thomas Mun – frugal consumption is
important, just get what you need
5. Dudley North – Trade regulation is wrong
6. Jean Baptiste Colbert – Abundance of
money makes difference
7. David Hume – Trade balance is impossible
8. Jaques Turgot – tax on land only, free
>Ralph Recto- VAT Author
9. Adam Smith – Father of economics;
modern poli-economics; author of An Inquiry
into the Nature and Causes of the Wealth of
Nations.
10. Thomas Roberth Malthus – the power
of population is greater; Population vs. Food
11. David Ricardo – Law of Comparative
Advantage; Land, Labor, Capital
12. Karl Marx – Das Kapital; Capitalism
13. Carl Menger – Law of Marginal utility
>Economic Problems in the PH<
1. Inflation – rapid increase in Price
> Inflation and Hyperinflation
> GNP and GDP
2. Scarcity – Long period of lack of resources
- Shortage – immediate solution to the lack of
resources
> Normal goods - A normal good is one
whose demand increases as people's incomes or
the economy rise.
> Inferior goods - is a good whose
demand decreases when consumer income rises
(or demand rises when consumer income
decreases), unlike normal goods, for which the
opposite is observed
> Substitute goods - are goods which, as
a result of changed conditions, may replace each
other in use (or consumption)
> Complimentary goods - s a goods with
a negative cross elasticity of demand, in
contrast to a substitute goods. This means a
good's demand is increased when the price of
another goods is decreased.
3. Unemployment
4. Housing
5. Peso Power
6. Tax / Train Law
7. Population – Food vs. Pop.
8. Corruption
9. Traffic
>Economic Systems<
1. Traditional – answers/give a solution to
problems
2. Command – controlled by the government
3. Market – preference/choice of the
consumer
- Macroeconomics – whole country; whole
- Microeconomics – specific group/place
Milton Friedman’s Theory
 Positive Economics – What is
happening?
 Normative Economics – What should
happen?
>DEMAND AND SUPPLY<
Law of Demand – Price decreases, Quantity
increases (vice versa)
- Shift to the right – increase
- Shift to the left - decreasing
>ELASTICITY<
- response of the consumers to the demand
>Elastic – more than 1 (ex. Luxury items)
> Inelastic – less than 1 (ex. Basic needs)
> Unitary – equal 1
* When it is 0 perfectly elastic (demand does
not change at all when the price changes)
%ΔQ
Formula of Elasticity: %Δ𝑃
>7 FACTORS OF SUPPLY<
1. Cost – worth/value of raw materials

Law of Supply – Price decreases, Quantity 2. Technology – makes life easier

decreases (vice versa) 3. Weather/Climate
- Shift to the right – increase 4. Subsidy – help given by the government
- Shift to the left – decreasing
5. Price of Related Product
P – dependent Q – independent
6. Expectation
Demand – willingness and ability of the
market to buy 7. Number of Selling

- Curve, Schedule, Law, Function, Market, >MARKET STRUCTURES<

Price and Quantity
1. Perfect – No single service, no single buyer,
>Determinants of Demand< all are equal

1. Population 2. Imperfect

2. Income > Monopoly – 1 owner, 1 product

3. Expectation > Monopolistic competition – lots

owners, 1 product type
4. Preference
> Oligopoly – few sellers, 1 product type
5. Price of Related Products
> Monopsony – 1 buyer, lots of services
6. Trend/Fashion
7. Weather
8. Occasion
9. Gender
10. Age