BAC101 – BASIC ECONOMICS SEMI-FINALS

FACTORS OF PRODUCTION produce shoes, carpenter, lawyer, doctors, nurses, nurses,

ministers, professor, midwife, janitors, waitress, writers,
• Economic resources directors, cook, producers)
• all things required to produce goods and services - This are all makers of products and services

o TANGIBLE - product, it has possession (ex. When you

buy chocolate maiuuwi mo)
o INTANGIBLE - services, experience (ex. Pag pipila, or
if you go to boracay)
FACTORS OF PRODUCTION
1. LAND – mineral like gold, forest, deposit, wildlife, river,
water, air, island environment, climate
2. LABOR – tao that are working
3. CAPITAL – pera, manmade production, unlike land this is
not man made, tools, equipment, machine, building
4. ENTREPRENUER – overall manager in order for land, labor
and capital to combine all of those in order to do product,
from input to output.
- overall manager in production process
- combine and manages econ resources
- combine all 3 to have optimum mix
ENTREPRENUERS = INNOVATORS
INNOVATORS
• They are trend setters – they introduce products na dati
ay wala like inverter.
• Idea oriented people – they get idea that they can turn to
products and services
• Fighting instinct – they have the gut feel to what product
to produce
• Persistent – like a stair, they use it as a stepping stone to
use it for the success to reach goals, after several years
and failures nandun yung pagiging persistent
• Resourceful – they should know how to turn things
around
• Team player – this will all involve project; this involve
dealing with people

ROLE OF ENTREPRENUER
5 STEPS TO SUCCESS
1. Take charge in overall production
2. Formulate business decision ENTREPRENUER WORK FOR THEMSELVES
- Forecast, kung gano kadami ang kailangan iproduce 1. INCOPORATE YOURSELF MENTALLY
- marketing 2. BE A LIFE LONG LEARNER – education is a continuous
3. Innovate or introduce new things like new technique process (ex. Bill Gates they did not finish college but they
- Ex. Jollibee, from carenderia to nilagyan ng aircon, continue reading and learning)
guard, waiter, pinalinis ang process 3. BE A STUDENT OF CHANGE – debt is permanent,
everything is subject to change
4. UNDERSTAND YOUR THINKING PROCESS
ORDINARY BUSINESS MAN – can just copy, zerox ang isang 5. BEGGINING WORK IN A BREAK THROUGH IDEA – na idea
bagay that suddenly comes
ENTERPRENUER – may innovation, may dinadadagdag, not - ex. mga nakakaimbento ng internet, electricity, they
exactly bago pero may dinadagdag come to sudden and unexpected ideas)

QUALITIES OF ENTREPRENUER KINDS OF UTILITY IN PRODUCTION

1. SKILLFULL 1. FORM UTILITY – binabago ng isang entreprenuer yung

2. COURAGEOUS – (moderate risk taker) ready to take risk, itsura ng isang bagay as it undergoes manufacturing
but not very high risk kasi para ka na nung gambler, process
moderate risk lang, pag low risk ay di challenging - Ex. leather that can become to belt or shoes, from raw
3. SELF - CONFIDENT material nagiging bagay na sya, increase a certain
4. GOOD ACADEMIC BACKGROUND utility by changing its form
2. PLACE UTILITY – transporting product or goods into
proper places
AIM OR PURPOSE OF ENTREPRENUER 3. POSSESSION UTILITY – tangible, pag bumili ka ng product
kasama na yung ownership
1. To make money
- ex. If you buy a car
2. Gain prestige - pag kumita ka at nakikilala ka, public
- seller possesses the goods
acclaim and admiration
- owner sell it to the market
- Ex. Ramon ang owner of San Miguel
4. TIME UTILITY – product has expiration
- Ex. milk, food, medicine and they have to be disposed
due time
PRODUCTION – combination or exertion of effort para
- Mga walang time utility ay mga pako etc. hardware
magkaroon ka ng goods and services
5. SERVICE UTILITY – this are intangible goods, experience
- exertion to gain needed goods and wealth (ex. Cultivator, lang ang makukuha
baker to produce bread, shoemaker to convert leather to
BAC101 – BASIC ECONOMICS
CAPITAL - is an instrument that supports or adds labor to the
production, manmade production like (equipment, machinery).
TYPES OF CAPITAL
1. FIXED CAPITAL – goods that last for a long time (Ex. Land,
building)
2. CIRCULATING CAPITAL – goods that can be used once or
a few time in production
- Ex. Car, oil
3. PRODUCTIVE CAPITAL – type of capital na raw materials,
goods unfinished or finished that can help produce other
product
4. LUCRATIVE CAPITAL – goods na hindi ginagamit in
producing new wealth but pwede mag generate ng
income para sa owner
- Ex. Car for rent, taxi
5. CONSUMPTION CAPITAL – finished goods, goods directly
satisfy our wants
6. FREE CAPITAL – goods that can for unlimited no. product
of production
- Ex. Steel, iron
7. SPECIALIZED CAPITAL – goods useful only for one purpose
- Ex. Oil refinery, sugar refinery)
8. AGRICULTURAL CAPITAL – goods that are used in
agricultural
- Ex. Carabao
9. INDUSTRIAL CAPITAL – goods used in industrial
production
- Ex. Factory
10. COMMERCIAL CAPITAL – goods used for trade
- Ex. Ship, train
SPECIALIZATION IN PRODUCTION
• This are made due to struggle of man survival
• Man can be able to control his environment
EXPERTISE - if put to good use, it can down to public good to
society.
• Technology ay nababawasan ang poverty or kalagayan ng
tao. Tech is made to made work easy
ADVANTAGES OF SPECIALIZATION
1. ATTAINMENT OF GREATER SKILL – achieved by repetition
of work, when you work repeatedly it can lead to mastery
- Ex. Bank Teller, this work will be counting millions of
pesos daily, before at manually ngayon ay may
machine na for bills and coins which eases work)
2. FIT AN INDIVIDUAL TO THE RIGHT JOB – no matter what
the qualification, the HR will be able to match the task to
the right person
- Ex. Accountant that are fitted in the bank room which
deal with money and do not deal with people
- depends upon talent and skill of individual
3. USAGE OF MACHINERY INSTEAD OF HARD LABOR – using
machinery
- Ex. Counting machine which are able to count bundles
of money
SEMI-FINALS
4. SIMPLIFYING TASK – machine can free a lot of the task of
a person instead of working manually, operation
becoming simplified
5. STIMULATE INNOVATION – you can concentrate on one
job only
- Ex. Counting money as teller it is easier to balance and
do other jobs
6. SAVING OF TIME – with simplification of work being done,
maraming oras ang nasesave because if time and use of
technology
7. MANUFACTURING STANDARDIZED PRODUCT – Ex. Phone,
light, watch etc. same sizes para iisa ang gamit na machine
para mas mura
- Japanese invented machine to do things easier and
mass production
DISADVANTAGE OF SPECIALIZATION
1. MONOTONY OF LABOR – boredom
- you only do one kind of work so nagsasawa ka
2. PHYSICAL EFFECT ON THE LABORER – flexibility ay
nawawala because he is only accustomed to only 1 kind of
work
3. ABSENCE OF INITIATIVE – kahit walang nagbabatay dapat
nagwowork ka pa din, so dapat may motivation para pag
patuloy yung work.
4. SPECIALIZED SKILL IS LIMITED – yun lang ang ginagawa mo,
you only trained to do that kind of work
- you will find it hard to find work a d market yourself
pag hahanap ka ng ibang trabaho pero ang tanging
alsm mo lang ay yung specialization mo
6. STANDARDIZATION OF THOUGHT AND ACTION – Ex.
Divisoria, bili ka 1 dozen so mas mura yun because they
are made as mass production
- creativity and individuality
7. INCREASED DEPENDENCE – an individual or worker
becomes dependent in only 1 kind of work and dun ka
naka assign.
FORMS OF SPECIALIZATION
• Specialization by occupation or trade
• Some of the most common form of specialization are
o Big occupational group – domestic (Ex. Teachers,
doctors, barbers, Agriculture, forestry, mining
and quarrying, hunting, manufacturing,
mechanical industry, transportation like ship,
airplane and bus, Clinical, trade like stores and all
trading system)
• SPECIALIZATION BY TASK – work is divided by skill, ability,
judgement and know how ng worker
• SPECIALIZATION BY STAGES – ibat ibang stage hanggang
magibg finished product and done by different people or
player.
• SPECIALIZATION BY TERITORIES – geographical, location
depends upon the location where there are raw materials,
infrastructure, people (Ex. BPO or call center kaya sila
naparito ay mas mura and pasweldo and big savings for
the companies and mga available na tao or skilled laborer
na need ng BPO industry)
BAC101 – BASIC ECONOMICS
LABOR MARKET
The Philippine Labor Market
• In the Philippines, the labor supply is the portion of the
population who are 15 years or older who are willing and
capable to work, actively seeking work but have yet to find
one, and those who are employed.
• For the employed, full time workers are those who work
for at least 40 hours / week while the part time workers
work for less than 40 hours weekly.
• People excluded from the work force are stay at home
parents, full-time students, physically and mentally
disabled, and those who do not wish to work and are not
actively seeking.
Why is the Unemployment Rate important
Macroeconomics?
• Unemployment rate have costs (e.g. economic, social, and
psychological.) Unemployment rate reduces the
productivity of a society.
• Underemployment means that an individual is working
below his capacity and with lower salary than he is capable
of earning.
• Labor Force = Unemployed + Employed
• Unemployment rate = Unemployed/ Labor Force
• Participation rate = Labor Force / Population 15 years old
and over
Philippine Labor Market
• In the year 2014, the Philippines has experienced an
overall increase in the rate of employment from 63.9% to
64.4%.
• This is partially due to economic growth which has paved
the way for to expansion of businesses.
Philippine Wage Situation
• In the Philippines, entry-level workers receive minimum
wages that range from P444 to P481 (as of 2015.) Many
Filipinos would argue that the amount is insufficient to
provide for the daily needs of one's family.
• To get a higher basic pay or employment, it has been
common for Filipinos to work in urban areas, or even
outside the country.
• This trend has resulted to congestion in urban areas, and
at the same time higher economic growth.
Philippine Peso and Foreign Currency
• Trading among countries is an important economic
activity as it opens up business and employment
opportunities. it is also inevitable specially in the case of
importing scarce resources (oil and rice.)
SEMI-FINALS
o Import – purchase of foreign goods by domestic
country
o Export – selling of domestic goods to foreign
countries
o Net Exporters – are countries who sells more
domestic goods to foreign countries
o Net Importers – are countries who buys more
foreign goods
• The Philippines has historically been categorized as Net
Importer.
• In trading with other countries, at least two currencies are
exchanged to facilitate the buying and selling of goods.
• The interdependence of currencies also influences the
value of a currency. A domestic currency's value increases
(appreciates) when the demand for it increases (and the
supply decreases.)
in
• The price that balances the supply and demand for
foreign-currency is the real exchange rate.
• The demand curve for foreign currency is downward
sloping because a higher exchange rate makes domestic
goods more expensive.
• The supply curve is vertical because the quantity of dollars
supplied for net capital outflow is unrelated to the real
exchange rate.
Savings and Investment
• Saving is defined simply as the postponement of
consumption.
• Investment is defined as building the capital stock for
more future production and consumption.
• Savings is to investment as depositing in a bank is to
attending seminars and trainings.
The Credit System
• is composed of savers and borrowers
• Banks accept deposits of savers only because they can
lend these moneys to borrowers.
• businessmen accelerate the growth of their business by
borrowing money lent by the savers to financial
intermediaries.
• Government are also one of the borrowers of money (T-
bills and T-bonds).
• The existence of these 2 groups represent the demand
and supply for money.
• Interest rate – is the price of using money
• The government and BSP uses fiscal and monetary policies
to control interest rates when it gets too high or too low
BAC101 – BASIC ECONOMICS
TAXES
• Taxes - are percentages of sales and income which serve
as enforced contribution by individuals to the government
payable by money.
• Paying taxes gives life to the functions and services of
government.
• The government provides basic services (public schools,
hospitals, roadways, etc.), national defense, employment
opportunities (biggest employer in the country), income
redistribution if need be, among others.
Tax Rates
• it determines the amount of taxes paid by Filipinos
• In the Philippines, the tax rate system used is progressive
which ensures equitable levying of taxes. However, it
remains a big burden as the country has the highest tax
rates (32%) among ASEAN COUNTRIES.
Impacts of Taxes
• Setting high tax rates increases government's revenue but
it discourages economic activities. When tax rates are set
too low, government income becomes insufficient to
address the needs of the country.
• Hence, government provides tax incentives or often set
varying tax rates to encourage desirable activities (adopt
a school program) and discourage undesirable economic
activities (alcohol and tobacco).
• When products are taxes, prices go up. In result, the
quantity supplied and demanded goes down --> lower
GDP
Tax Collection
Collection rate has improved in the last few years. Ease of
paying taxes, malversation of funds, non-inclusive growth and
cases of corruption influences the desire of some Filipinos to
pay their taxes right
LIMITS OF SPECIALIZATION
• it is limited by the market
• applicable for mass production and profitable for large
market
• reluctant to resort to hard labor because employees are
motivated for large business, work harder
PRODUCTS THAT CANNOT BE MANUFACTURED IN
STANDARD PATTERN
MANUFACTURING STANDARD, TECHNICAL DIFFICULTIES (EX.
CUTTLERIES)
SEMI-FINALS
NEW INDUSTRIES – gumagawa ng 1 product so pwedeng
specialization, as company go bigger gumagawa na sila ng
ibang products they tend to diversify
- Ex. San Miguel, before ay beer lang, ngayon ay may
construction etc.
VARIOUS TYPE OF PRODUCT LIFE CYCLE
- we can compare the life cycle
1. INTRODUCTION – the moment we are born", the moment
a product or service is born
- customers are not aware of product
- consumer awareness and acceptance is low
- launching and marketing activities ang ginagawa, so
ang company ay gastos ng gastos to promote product
so lugi pa ang company at di pa sila kumikita because
it is costing large money.
2. GROWTH – growing demand, inorder to satisfy demand,
they add machines, put more branches, people, add
capacity so it can have distributed in large areas, hires
more employees
- profit and sales ay lumalaki, now earning
- para malawak sakop
- kilala na ng tao ang product
- to remain it at growth stage, they have to continue
expanding and when it becomes more popular and
more people are using it, they open in other countries,
continues to produce new models so that it can
maintain and tumaas yung growth (Ex. Toyota, Coke)
3. MATURITY – sales may still be rising
- rate of increase ay bumagal
- reach its peak
- it can also start to fall
4. DECLINE – like a person nagreretire na o tumatanda na
- productivity ay bumababa na
- sharp fall in sales
- profit ay flat na which means ay di na sya kumikibo
- pwedeng mawala na sa market
• It is important for the company to know the duration of
their product life cycle
PRODUCTION OF COST ANALYSIS
• it is important for consumer to be cost conscious, they
exert pressure sa producing sector, to constantly produce
cost reducing method.
• If a company exert cost reducing method ito ay exposure
sa cost analysis
• All business they offer goods and services for sale but
merong business that buy finished goods and they don’t
manufacture they own product (Ex. SM, sari-sari stores,
retail stores). In business such as retail stores and business
who buy raw materials, people to produce finished
product they both incur cost
• Manufacturing – input
BAC101 – BASIC ECONOMICS SEMI-FINALS

• the higher the cost, the higher the margin or profit, higher UNDERGROUND ECONOMY
a business will charge for goods and services
• businesses that is not registered but it is being tolerated
• high profits with high cost it spells high prices because it is micro at nakakatulobg sa customers, but no
tax
• low cost can make high profits even with lower prices
• Ex. Fishball vendors, carpenters for repairs, gardener,
• Profit = Sales - All expenses
tutor, etc.
• damihan o bawasan sa administrative cost ay fixed (like
• Government will turn a blind eye and even gov. saw it they
salaries, rental, permanent employees)
tolerate it; they give chance to people to earn a living kesa
• Manufacturing cost ay may direct relationship sa prices mag resort sa illegal activities
because yung admin cost ay usually fixed especially sa
short run period
• Cost represent money outlay that the firm money must lay
• Economic profit ...
• Opportunity Cost ay cost that is you choose something or
have an alternative ay nawala na
• Sunk Cost

BUSINESS CATEGORY OR SECTOR

2 KINDS OF BUSINESS - PRODUCT AND SERVICES

1. SERVICE BASE BUSINESS

- Ex. Consultancy, barbershop, professional
services such as doctor accounting firm

2. TRADING
- Ex. Bakery, general construction, grocery store)

3. MANUFACTURING BUSINESS
- Ex. Sony

4. LICENCE BUSINESS OPPORTUNITY

- Franchise (Ex. McDo, Jollibee, etc.)

5. DISTRIBUTORSHIP
- Ex. Exclusive distributor ka ng UNILAB so ikaw
mag didistribute sa branches

6. RACK JOBBER
- buyer or agent
- they enter to agreement into a parent company
and they try to market goods in various store by
putting it in store

7. WHOLESALER
- gets his products and services from distributor
- sila yung binibilhan ng retailer or tindahan na
ititinda nila

8. SUBCONTRACTING
- yung contractor will hire a sub-contractor to
finish roofing, pluming, line canal for bridges

9. VENDING MACHINE
- one way of distributing
- parang ATM , look for place, secure it well which
is makakatipid ng personnel and an item can only
pop up (Ex. Sa 7 eleven)