NATURE AND

IMPORTANCE OF
CHAPTER 1

ECONOMICS

Prepared by: Eurica V. Bisagas

BSAR 5B
Definition of
Economics ECONOMICS

- is the social science that aims to

describe the factors that determine the
production, distribution and consumption of
goods and services.”
WHAT IS THE DIFFERENCE
BETWEEN WANTS AND
NEEDS?
NEEDS
- necessary for
survival (such as
food and shelter)
WANTS
- simply something
that a person would
like to have.
 BRANCHES OF
ECONOMICS:
MICROECONOMICS
AND
MACROECONOMICS

 - a branch of economics that

studies the behavior of individuals
and firms in making
decisions regarding the allocation
of limited resources.

Microeconomics

- applies to markets where goods or

services are bought and sold.

 - dealing with the performance,

structure, behavior, and decision-
making of an economy
as a whole, rather than individual
markets.

Macroeconomics

- includes national, regional, and

global economies

History of Economics

JOSEPH
SCHUMPETER
- described Thomas Aquinas as
"coming nearer than any other group
to being the 'founders' of scientific
economics" as to monetary, interest,
and value theory
within a natural-law perspective.
History of Economics

MERCANTILISM

- was an economic doctrine that

flourished from the 16th to 18th
century in
a prolific pamphlet literature.
History of Economics

PHYSIOCRATS
- is a group of 18th-century French
thinkers and writers.
CLASSICAL
POLITICAL
ECONOMY
 - considered to be the first
formalization of economic
thought.

- "the effective birth of

economics as a separate
discipline."

- discusses potential benefits

of specialization by division of
labour, including increased
Adam Smith's The Wealth labour productivity and gains
of Nations (1776) from trade, whether between
town and country or across
countries
CONSTITUENT
- those which constitute the very
bonds of society and are compulsory

FUNCTIONS in nature

MINISTRANT
- those that are undertaken only by
way of advancing the general

FUNCTIONS interests of society and are merely

optional.
VALUE
THEORY

- encompasses a range of
approaches to understanding
how, why, and to
what degree persons value
things; whether the object of
valuing is a person, idea, object,
or anything else.

SIGNIFICANCE OF ECONOMICS

Economics
Scarcity Efficiency Choice Opportunity
Cost
FOUR TYPES OF ECONOMIC SYSTEM
TRADITIONAL ECONOMIC SYSTEM

- the most conventional and ancient type of economy in the

world.

- Traditional economies still produce products and services

that are a direct result of their beliefs, customs, traditions,
religions, etc.
 COMMAND
ECONOMIC SYSTEM
a large part of the economic system is

controlled by a centralized power, often, a

federal government.

- Often the government will own

everything involved in the industrial
process, from the equipment to the
facilities
MARKET ECONOMIC
SYSTEM

- The government does not control vital resources, valuable goods or

any other major segment of the economy.
MIXED ECONOMIC
SYSTEM

- also known as a Dual Economy

is just like it sounds, a
combination of economic
systems, but it primarily refers to
a mixture of a market and
command economy.
THANK YOU!