Microeconomics Module 1

Republic of the Philippines
APAYAO STATE COLLEGE

Luna, Apayao, Philippines 3818
APAYAO STATE COLLEGE VISION, MISSION, GOALS, AND

OBJECTIVE
Vision
“Empowering lives and communities through stewardship for cultural sensitivity
and biodiversity”
Mission
Apayao State College is committed to provide empowering and holistic
development of citizens by providing quality and innovative instruction, strong
research, responsive community engagement and entrepreneurship in order to
prime the development of Apayao Province, the Cordillera Administrative
Region.
ASC OBJECTIVES
• To elevate quality access and relevance for instruction

• To strengthen research and development and extension
capability, outcomes and impact
• Strengthen partnership and institutional linkages to increase
the regional impact of ASC extension program.
• Increase productivity and income of ASC
• Enhance governance and organization and management
system, processes and environment.
ASC GOALS
• Transformative and empowering education

• Increase capacity and performance in research and
innovation.
• Create a significant and highly visible development
impact in the region.
• Generate additional resources for strategic
investment programs and initiatives
• Transparent, responsive, unifying and empowering
governance.
MICROECONOMICS 2 |Page
ASC OBJECTIVES
• To elevate quality access and relevance for instruction

• To strengthen research and development and extension
capability, outcomes and impact
• Strengthen partnership and institutional linkages to increase
the regional impact of ASC extension program.
• Increase productivity and income of ASC
• Enhance governance and organization and management
system, processes and environment.
COLLEGE OF TEACHER EDUCATION

Three to five years after graduation, the graduates are expected to
be:
Effective and competent teacher.
Skilled writer and speaker.
Effective leader and model citizen.
Agent of peace.
Honest and person of integrity.
Extensionist
Researcher
Responsible and God-fearing citizen.
BACHELOR OF SECONDARY EDUCATION

PROGRAM EDUCATIONAL OUTCOMES:
1.Demonstrate in-depth understanding of the diversity of learners in
various learning areas.
2.Manifest meaningful and comprehensive pedagogical content
knowledge (PCK) of the different subject areas.
3.Utilize appropriate assessment and evaluation tools to measure
learning outcomes.
4.Manifest skills in communication, higher order thinking and use of tools
and technology to accelerate learning and teaching.
5.Demonstrate positive attributes of a model teacher, both as an
individual and as a professional.
6.Manifest a desire to continuously pursue personal and professional
development.
Microeconomics Course
Welcome to the Microeconomics course!
The course covers the fundamentals of economics in the micro-level

spectrum like individual businesses or industries, basic economic
models, and individual consumer theory in a very accessible manner
that opens doors for more significant learning. It also aims to help
students develop critical thinking and raise worthy insights into
economic issues and concerns that affect individuals and society.
We hope that you will find this module helpful and exciting.
Course Code: SSE 104 Semester: First
Course Title: Microeconomics Prerequisite :
Credit: 3.0 units No. of Hours: 3
hours/week
Course Outline
Week Course Topic
1 College Vision, Mission Goals, and Objectives of the
College
1-2 Introduction
Basic concepts and terms of economic studies

The essence of studying economics
Fundamental economic problems, activities, and
factors of production
Divisions of economics
3-4 Economic System
The Circular Flow Model
5-8 Basic Analysis of Demand and Supply
• The Law of Demand
• Methods of Demand Analysis
• The Market
• Practical Application of the Concept of Change in
Quantity Demanded and Change in Demand
• Law of supply
• Methods of Supply Analysis
• Changes of the Supply Curve
• Market Equilibrium and Disequilibrium
Price Controls
9 MIDTERM EXAMINATION
10-14 Concept of Elasticity
• Elasticity of Demand
• Income, Price and Cross Price Elasticity of Demand
Elasticity of Supply
16 The Concept of Cost

• Concepts and types of cost
17 Chapter 6 Market Structures
18 FINAL EXAMINATION
Instructor’s Note
Have a wonderful day! I hope you’re healthy and safe

throughout the epidemic. I admired you for
persevering with your studies despite such difficulty.
You have just proved that there is no more significant
hindrance to an eager student seeking advancement in
school and study than this. Maintain this practice. Your
educational journey will serve as an inspiration to a
thousand new students.
I’m thrilled to be a part of your journey to accomplish your objectives. Although
you are unable to attend school or lessons in person, I am delighted to inform you
that I can still assist you with this subject. I am CESAR F. DE GUZMAN JR.,
your instructor. If you require assistance in comprehending the subject or have
any questions, please contact me by email at cesarjrdeguzman11@gmail.com, on
Facebook as Cesar Flor de Guzman Jr, or by phone or text at 09955955958. I am
available by phone or text during the week.
I pray that God meets your needs, protects you, and leads you throughout
your life. Despite this obstacle, I wish you continued opportunities for growth and
inspiration.
Sincerely yours,
CESAR F. DE GUZMAN JR.

Instructor
Module 1
Basic Economic Concepts
Objectives
• Define economics
• Discover the basic concepts and terms of economic studies
• Discuss why we study economics
• Identify the fundamental economic problems, activities and
factors of production
• Compare divisions of economics
The first section of this module discusses fundamental economic principles

that serve as a foundation and guidance for understanding economics.
Perhaps you’re wondering why economics is necessary to study. To begin,

allow me to describe our current scenario. In essence, humans require resources
to exist and fulfill their desires to live a decent and pleasant life. We frequently
consider where what, and how to obtain resources to meet our requirements and
wants (food, shelter-guaranteed amenities, medicine, facemask/face shield, and
transportation, to name a few).
Unfortunately, in reality, available resources are insufficient to meet all of
our needs. That is why individuals discover alternative methods to survive like
growing their own food in their backyards, selling goods and services online,
making a locally made face mask, riding their bicycles to work, and other
alternative ways of life. We begin to think economically when faced with a
scarcity of resources.
Economic thinking enables us to be more efficient in our resource allocation
decisions, as it constrains and directs our unlimited desires within the constraints
of our available resources. Economic thinking enables us to comprehend and
enjoy fulfillment in the face of scarce resources. Economics comes into play when
we attempt to maximize the use of our resources in the face of scarcity. Therefore,
do you wish to be content with your resources? Then consider economics...We
take a closer look at the basic concepts of economics by knowing its origin and
definition
MICROECONOMICS 10 | P a g e
Origin of the word “economics”

The two Greek roots of economics are oikos-
meaning household- and nomus- meaning
system or management. Oikonomia or
oikonomus therefore means the
“management of household”The term was
used by the Greek philosopher Xenophon
(431-360 BC), who wrote about how
landlords could more effectively manage
their estates. Among other things, he
mentioned division of labour and
specialization of workers( workers given
specific tasks which they concentrated on.
With the growth of the Greek society until
its development into city-states, the word
became known or was referred to as “state
management”.
Management of Household – Microeconomic branch of economics.
A household must make numerous selections that are familiar to us, such as
what food to purchase, cook, and consume. Who will buy food, cook it, and
consume it? Who is going to wash the dishes? Who will provide food for the
pigs, cows, and others? Who is going to drive the car? How will we pay our
debts and other obligations... All of them are economic in nature, as we will talk
further regarding choices, allocation, and scarcity.
State Management- Macroeconomic branch of economics.
State management involves the management of economic aggregates like national

income, national output, money, savings, employment, government spending,
inflation, and recession.
Since our course is microeconomics, the succeeding topics we will focus on are
microeconomics.
Economics Defined
Economics is a study of how individuals and society

1 generally make choices that involve the use of scarce
resources from among alternative wants that need to
be satisfied.
Efficient allocation of the scarce means of production

2 (economic resources) toward the satisfaction of human
needs and wants.
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Economics is the proper allocation and efficient use of
3
printing
available resources for maximum satisfaction and
typesetting ind
of human
wants. It is a study of how we manage our scarce
resources.
Common words among definitions
Resources- The labor, capital, land and natural resources and

entrepreneurship used to produce goods and services.
Unlimited – without limits, infinite
Scarcity- a situation wherein the amount of something available is

insufficient to satisfy the desire for it.
- Limited availability of economic resources relative to man’s or

society’s unlimited demand for goods and services.
- Scarcity is the basic and central economic problem confronting
every man and society.
Allocation- making proper choices. Economics steps in to assist

individual in making proper choices.
Efficient- refers to productivity and proper allocation of economic

resources. Being efficient in the productivity in the production and
allocation of goods and services saves time, money and increases the
firm’s output.
Wants –are means of expressing a perceived need or desire for goods

and services. Such wants are unlimited and numerous.
Two kinds of wants: Public wants and Private wants.
Needs- are basic requirements for survival like food, water and shelter
Three kinds of needs: basic needs, essential needs for descent and
comfortable living, needs for luxury goods.
 It implies that we cannot have all we want. Hence, we need to
make the best use of scarce resources to satisfy our wants as
much as possible.
Essence of Studying Economics
To understand the world better
Applying the tools of economics can help you understand global and cataclysmic
events such as wars, famines, epidemics, and depressions. Economics has the
power to help us understand these phenomena because they result from the
choices we make under the condition of scarcity.
To gain self-confidence and become wise decisions makers
Mastery of economics will help you to understand how things work in your
society, thereby “feeling equipped”
To achieve social change and contribute to National Development
Economics can help us understand the origins of severe social problems such as
unemployment, hunger, poverty, disease, child abuse, drug addiction, violent
crime. It will also explain why previous efforts to solve these problems have failed
and help us to design new, more effective solutions.
To help prepare for other careers
Economics has long been a popular college major for individuals who are
intending to work in business. But it has also been popular among those planning
careers in politics, international relations, law, medicines, engineering, etc. This
is for good reason because practitioners in each of these fields often find
themselves confronting economic issues.
Basic Terms in Economics
Goods- refers to products traded, sold, bought, and utilized that satisfy a
person’s wants and desires.
Tangible goods- goods and commodities like shoes, books, umbrellas, etc.
Intangible goods are in the form of services, like services rendered by
doctors, teachers, and nurses, which also satisfy human needs and wants.
Aside from services, copyrights, franchises, or patents are also intangible
goods.
Goods according to use: a. Consumer goods- goods intended for final use
by the consumer, like milk, soft drinks, and food. b. Capital goods are
used in the creation or production of other goods and services like
buildings, machinery, and equipment.
Essential or necessity goods are goods used to satisfy the basic needs of
man, such as food, clothing, shelter, and medicine.
Luxury goods are goods that may do without but are used to contribute to
his comfort and well-being, such as chocolates, perfumes, expensive cars,
ad houses.
Consumers are people who use goods and services. Services are the
efforts rendered by someone for a price, such as haircuts, doctor’s visits,
or economic consulting. Value is an assignment of worth basically
expressed in terms of price.
Goods & Services
Goods
1. Goods are tangible i.e. they can be seen and touched.
2.There is a time gap between
production and consumption of goods.
3.They can be stored and be used later.
4. They can be transferred from one
place to another.
Services
They are not tangible i.e. they can neither be seen or touched.
2. There is no time gap between production and consumption.
3. It cannot be stored.
4. Transfer of service is not possible. You can touch the teacher but not what she
is teaching.
E.g. The teacher is teaching and you are learning,
Production and consumption is taking place at the same time.
You cannot store her teaching nor transfer what she is teaching
now.
This is a service the teacher is giving you.
Free Goods
1. It’s a free gift of nature.
2. Available in plenty. Not scarce.
3. It has uses but you don’t have to pay for it.
4. Their supply is more than their demand.
Desert Sand
This is free and available in plenty
i.e. unlimited quantity of sand is
Economic Goods
1. They are not free.
2. They are scarce.
3. It has uses and you have pay for it.
4. Their demand is more than their supply.
Sand at a construction site
This not free and you have to pay
for this sand. You get sand for
how much you have paid, if you
d d
Positive and Normative

Economics
Positive economics is an economic analysis that considers economic conditions

“as they are”, considers economics “as it is”. It uses objective or scientific
explanations in analyzing the different transactions in the economy. It simply
answers the question ‘what is’.
Example:
1. The economy is now experiencing a slowdown because of too much

politicking and corruption in the government.
2. The economy is now on a slowdown because the world is experiencing a
financial and economic crisis.
Normative economics is an economic analysis which judges economic

conditions “as it should be”. This economic is employed to make value
judgments about the economy and suggest solutions to economic problems.
Example:
1. The Philippine government should initiate political reforms in order to

regain investors’ confidence, and consequently uplift the economy.
Consider the following statements:

a. (Urban resident): The price of rice ought to be low to improve the
well-being of workers.
b. (Farmer): The price of rice should be high enough to make farmers

prosperous.
c. After a good harvest, the price of rice will fall. But after a bad
harvest, the price of rice will increase.
Statement (a) and (b) are based on the value judgments of the
persons speaking them. Statement (c) is a scientific statement,
also known as a positive statement.
Fundamental Economic
Activities
1. Production simply means the process of transforming raw materials (inputs)

to a finished product (output).
Inputs are commodities or services that are used to produce goods and
services.
Outputs are the different goods and services which come out of the
production process.
Society have to decide what outputs will be produced and in what
quantity.
2. Distribution refers to the physical apportionment of goods and services from
the producers to the consumers or simply called marketing distribution or
trade (barter).
Sometimes also referred income distribution- a manner of dividing the output
of production among labor, owners of capital, business management, and
owners of the factors of production.
3. Consumption is the process of using goods and services in the direct

satisfaction of human wants. (Thus, people eat to satisfy hunger. They
require means of shelter to keep themselves safe and healthy. They use
clothing for comfort and other reasons) Consumption is the ultimate end of
economic activity. WHEN THERE IS NO CONSUMPTION, THERE WILL
BE NO NEED FOR PRODUCTION AND DISTRIBUTION.
4. Exchange is the transfer of ownership over goods and services from one
person to another. This is anchored on the use of money or credit. Activities
of buying and selling are involved. The prices for goods and services are
determined by the interaction of sellers and buyers.
Trade happens between consumers and producers; producers and suppliers of
services; between businesses; and between countries.
Four Basic Economic

Questions
What to produce?
This refers to the choice of goods and services that the
economy should produce.
How to produce?
This refers to the choice of resources and the particular technique
used in producing goods and services. (labor intensive production
or capital intensive production)
services that the economy should produce.
How much to produce?
Identifies the number of goods and services needed to be produced
in order to answer the demand of man and society.
(Underproduction or shortage, Overproduction or surplus).
For whom to produce?

Identifies the people or sectors who demand the commodities
produced in the society
THE CONCEPT OF
OPPORTUNITY COST
In economics, opportunity cost refers to the foregone value of the next

best alternative. In particular, it is the value of what is given –up when one
makes decisions or trade-offs.
FACTORS OF PRODUCTION
1. Land includes all natural resources, including mineral deposits,

water, air, trees, poultry, livestock, and all other forms of these raw
materials used in production.
2. Labor is any form of human effort like physical or mental, which is
exerted in the production of goods.
3. Capital. The word comes from the Latin caput which means “head”.
It refers to tangible, physical good that a person or society creates in
the expectation that its use will improve or increase future
production. Refers to the machinery, tools, equipment, and

structures used to produce goods into finished goods or products.
4. Entrepreneurship is the ability of an individual to provide the right
kind of good or service at the right place and time to the right people
at the right price. They hope for profit but take risks, losses, or
bankruptcy.
This word comes from the French word entreprendre, which means “to undertake.” An
entrepreneur serves as a supervisor, manager, or owner of a business.
Four Distinct Characteristic of entrepreneur
1. Have the competence to organize factors of production.

2. Know how to make business decisions. They can easily answer the
four basic economic questions.
3. Risks takers.
4. Innovators. Have the ability to introduce or improve a product that
already exists in the market and/or create new ways of organizing
business.
DIVISIONS OF ECONOMICS
MICROECONOMICS
Specific
 Deals with the economic behavior of the individual units such as

consumers, firms, the owners of factors of productions.
 Microeconomics operates on the level of the individual business firm, as
well that of individual consumer. It concerns how a firm maximizes its
profits, and how consumers satisfy its satisfaction.

MACROECONOMICS
General, economy as a whole
 Deals with the economic behavior of the whole economy or its aggregate
such as government, business, unemployment, inflation and the like.
 Refers to management of income, expenditures, wealth or resources of a
nation.
SUMMARY
Economic theory was defined in Module 1 as the efficient allocation of scarce

means of production (economic resources) toward the satisfaction of human
needs and desires. The scarcity of resources causes us to consider economics;
the fewer resources you have, the more cautious you are about where and how
to spend them appropriately. Lack of resources occurs when they are
inefficiently allocated or restricted concerning man’s needs and desires. The
term “factors of production” refers to resources. They are divided into four
categories: land, labor, capital, and entrepreneurship. We can develop things and
services that meet our needs and desires using these resources. Needs are things
without which we cannot survive.
On the other hand, wants are things that are less necessary and that we can
live without. There are four economic activities: production, distribution,
consumption, and trade. These activities seek to address one of four fundamental
economic questions: what, where, who, and how to produce.
Microeconomics and macroeconomics are the two branches of economics.

The former is concerned with the behavior of individual components, whereas
the latter is concerned with the overall behavior of the economy.
REFERENCES
Lucas, Marilou et al., (2009). Basic Economics with Taxation and Agrarian Reform
Coursebook.” ASCU-Solid North Inc.
Bato, Ma. Jesusa et al., (2011). “Micro Economics Simplified .” Mandaluyong City:
National Bookstore.
Bon Kristoffer Gabay et. al., (2012). “Economics: Concepts and Principles with
Agrarian Reform and Taxation).” Manila: Rex
Bookstore, Inc.
Mun, Har Wai et. al., (2016). Economics. Selangor Malasia: SJ Learning
Mendoza, Lorelie, and Tapang, Bienvenido, (2001). Introduction to Economics.

University of the Philippines Open University
Pettinger, Tejvan., (2017). Cracking Economics. Octopus Publishing Group, Great

Britain.
SSE 104
MICROECONOMICS
Activities
Name:____________________________________________
Program & Section: __________________________________
Instructor: CESAR F. DE GUZMAN, JR.
Activity 1-2
We have been taught that needs are fundamental for survival and
that even without wants, we can survive. Could you provide an
example from your community that demonstrates how wants or
__________________________________________________________
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__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
__________________________________________________________
Activity 1-2
With your economics knowledge, explain why scarcity serves as the
foundation for economic thinking.
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Activity 1-3
Kindly indicate two specific applications of economics in your daily
life.
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
Activity 1-4
Identification. Directions: Fill in the blanks below:
1. They are in a form of services, like services rendered by doctors,

teachers, and nurses, which also satisfy human needs and wants
examples of ______________.
2. Water from the ocean is an example of _________good.
3. A printer and a camera are tangible and considered as _________
goods.
4. According to the definition of good, refers to things that are produced,
traded, sold, bought, and utilized which satisfy a person’s
_________________.
Activity 1-5
Identification. Directions: Fill in the blanks below:
1. The price of face mask have soared during the time ECQ because of
an increasing demand of people for protection against COVID -19. But
after many companies and individuals started producing face-mask,
resulted to the decrease of the price of face mask. This statement is
an example of ________________ economics.
2. In the Philippines, our labor force is increasing due to our growing
population and the government should focus on how to employ
workers rather than machines doing mostly the works. This
economic problem of how to produce refers to
__________________.
3. In factors of production,_______________ like machines are
goods that are used in producing other goods.
4. Without ______________there will be no need for production and
distribution because it is the ultimate end of economic activity.
5. Another term for opportunity cost that results because of scarcity is
_______________.

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Republic of the Philippines

APAYAO STATE COLLEGE

APAYAO STATE COLLEGE VISION, MISSION, GOALS, AND

• To elevate quality access and relevance for instruction

• Transformative and empowering education

• To elevate quality access and relevance for instruction

COLLEGE OF TEACHER EDUCATION

BACHELOR OF SECONDARY EDUCATION

Welcome to the Microeconomics course!

The course covers the fundamentals of economics in the micro-level

Course Code: SSE 104 Semester: First

Course Title: Microeconomics Prerequisite :

Credit: 3.0 units No. of Hours: 3

Basic concepts and terms of economic studies

16 The Concept of Cost

Have a wonderful day! I hope you’re healthy and safe

CESAR F. DE GUZMAN JR.

The first section of this module discusses fundamental economic principles

Perhaps you’re wondering why economics is necessary to study. To begin,

Origin of the word “economics”

Management of Household – Microeconomic branch of economics.

State Management- Macroeconomic branch of economics.

State management involves the management of economic aggregates like national

Economics is a study of how individuals and society

Efficient allocation of the scarce means of production

Lorem Ipsum is simp

Common words among definitions

Resources- The labor, capital, land and natural resources and

Unlimited – without limits, infinite

Scarcity- a situation wherein the amount of something available is

- Limited availability of economic resources relative to man’s or

Allocation- making proper choices. Economics steps in to assist

Efficient- refers to productivity and proper allocation of economic

Wants –are means of expressing a perceived need or desire for goods

Two kinds of wants: Public wants and Private wants.

Essence of Studying Economics

To understand the world better

Basic Terms in Economics

Goods & Services

Production and consumption is taking place at the same time.

This is a service the teacher is giving you.

1. It’s a free gift of nature.

2. Available in plenty. Not scarce.

3. It has uses but you don’t have to pay for it.

4. Their supply is more than their demand.

This is free and available in plenty

i.e. unlimited quantity of sand is

1. They are not free.

2. They are scarce.

3. It has uses and you have pay for it.

4. Their demand is more than their supply.

Sand at a construction site

This not free and you have to pay

for this sand. You get sand for

how much you have paid, if you

Positive and Normative

Positive economics is an economic analysis that considers economic conditions

1. The economy is now experiencing a slowdown because of too much

Normative economics is an economic analysis which judges economic

1. The Philippine government should initiate political reforms in order to

Consider the following statements:

b. (Farmer): The price of rice should be high enough to make farmers

1. Production simply means the process of transforming raw materials (inputs)

3. Consumption is the process of using goods and services in the direct