WHAT IS ECONOMICS?

According to Paul Samuelson and William Nordhaus, economics is “the study of how
societies use scarce resources to produce valuable commodities and distribute them
among different people”
For British economist Lionel Robbins, economics is “the science which studies human
behavior as a relationship between ends and scarce means which have alternative use”
Meanwhile, Filipino economist Gerardo Sicat defines economics as “the study of how
individuals and society generally make choices that involve the use of scarce resources
from among alternative wants that need to be satisfied”
We can define economics as the study of “how society decide to allocate scarce
resources among different alternative uses in order to satisfy the most important wants
of people.”

Greek word
Oikos – household/family
Nemein – management
Oikonomein – manage the household or household management

THREE FUNDAMENTAL QUESTIONS IN ECONOMICS

 What to produce in what quantity?

- pag alam natin yung product malalaman natin kung pano natin mamamarket yung
product at paano natin mamamaximize pag gamit natin.
- Society has to analyze and choose the combination of goods and services that will
best respond to its wants.
 How to produce?
- The amount of factors of production to be allocated to the production of the
different goods and services should be determined.
 For whom to produce?
- ano yung hilig ng target market natin ganern.
- Who will eventually receive the goods and services must be answered.
THE SCOPE OF ECONOMICS
Economics – Classified into two main branches – microeconomics and macroeconomics.
Two main branches
Microeconomics – deals with the behavior of individuals in the market. The decision of
individual households and firms studied as well as how such decisions affect the
market.
- Mga negosyante, producers, suppliers, consumers, products and services
Macroeconomics – deals with the economy as a whole. It examines the overall prices,
production, and income.
- Bakit big deal yung mataas na unemployment labor. Yung mababang gdp
ganon ganon.
ECONOMICS AS A SCIENCE
- It is a systematic of study that focuses on the interaction of the different units of
society.
- Economics makes use of the scientific method to examine and explain “how society
makes choices regarding the use of scarce resources” in order to respond to human
wants.

SCIENTIFIC METHOD

 Identifying the Problem or Question

 Formation of Hypothesis
 Gathering and Processing Data
 Strengthening a Hypothesis
 Making a Conclusion

Identifying the Problem or Question

- What is the relationship between the degree of necessity of a product and the
magnitude of the effect of a price increase on the quantity demanded of such
product?
Formation of Hypothesis
- The greater the degree of necessity of a product, the less responsive quantity
demanded would is a price increase.
Gathering and Processing of Data
- Interviewing customers and owners of grocery stores and the like. Determining
which goods and services have quantity demanded that are more responsive to the
price increase.
Strengthening the Hypothesis
- Examining If the newly gathered data match the previously formulated hypothesis.
- Magagamit ba siya as evidence para mapatibay yung hypothesis mo ganern

TWO TYPES OF ANALYSIS

There are two types of analysis that economist engage in: one involves a desciption of
a situation while another gives a suggestion on what should be done in that particular
situation.
POSITIVE ECONOMICS
- It describes an economic phenomena using various concepts and ideas in
economics.
- The positive statement can be proven through the use of the scientific method.
- We can identify kung tama or mali talaga yung analysis natin
NORMATIVE ECONOMICS
- It gives a value-laden statements about what should be done.
- Proving or disproving normative statements would be difficult even it includes
factual ideas.
- It suggests the procedures or kung paano tayo magreresponse.
- It’s hard na patunayan kung tama or mali ba yung magiging analysis natin kahit
present na yung mga factual ideas or reports.

IMPORTANCE OF ECONOMICS
- Economics is important for society and for individuals. Leaders of the country use
economic data to formulate programs and laws that would help in improving the
state of the economy.