QUIZ 1

Wage is a fixed regular payment, typically paid on a monthly or biweekly basis but often
expressed as an annual sum, made by an employer to an employee, especially a
professional or white-collar worker.
FALSE
This is when resources ae being allocated in the most efficient manner.
FULL PRODUCTION
It is a social science that focuses on the production, distribution, and consumption of
goods and services, and analyzes the choices that individuals, businesses,
governments, and nations make to allocate resources.
ECONOMICS
It is the ability to produce a good using the fewest resources possible.
PRODUCTIVE EFFICIENCY
____is a fixed regular payment, typically paid on a daily or weekly basis, made by an
employer to an employee, especially to a manual or unskilled worker.
WAGE
It focuses on foreign trade, government fiscal and monetary policy, unemployment
rates, the level of inflation, interest rates, the growth of total production output, and
business cycles that result in expansions, booms, recessions, and depressions.
MACROECONOMICS
It comprises resources including manufacturing unit/plant, tools, equipment and
machinery, raw materials and finished goods.
CAPITAL
_______is the utilization of a good or a service for one’s very own satisfaction.
CONSUMPTION
This is the total monetary or market value of all the finished goods and services
produced within a country’s borders in a specific time period.
GROSS DOMESTIC PRODUCT (GDP)

This is the effort that people contribute to the production of goods and services.
LABOR
is an increase in the capacity of an economy to produce goods and services, compared
from one period of time to another.
ECONOMIC GROWTH
An economist is a person who brings other factors of production in one place.
FALSE
____ is the allocation of the total product (money incomes) among factors of production.
DISTRIBUTION
Full employment is when a society’s available human resources are being maximized
efficiently.
TRUE
QUIZ 2
It involves the absence of social classes, money, and the state.
Communism
It may range from minor problems where intervention is merely ineffective, to cases
where intervention produces new and more serious.
Government Failure
________is an economic principle that refers to consumer’s desire and willingness to
pay for a specific good or service.
Demand
_____is the minimum market price set for a certain commodity established to prevent
manufacturers in instituting prices that would ruin the market economic system.
Price Floor
_______is a kind of policy where the government regulates the money supply and level
of interest rates.
Monetary Policy
It is the quantity of a good that a specific consumer would purchase at a specific point at
a specific point in time.
Individual Demand
An economic and governmental system led by a dictator where private ownership of the
means of production exists but the government has a strong centralized power for
planning.
Fascism
The Invisible Hand Theory was introduced by Adam Smith in, his book. The Wealth of
Nations (1776).
True
An economic and political system that pursues to reallocate the wealth more equitably
by the collective ownership of natural resources and major industries, such as public
utilities.
Socialism
It is a situation where the private sector cannot able to allocated efficiently by our
resources by means of using price mechanism or when the operation of market forces
leads to a welfare loss.
Market Failure
This defines how market entities and market forces interact.
Economic Systems
Match the Statement (A) to Demand Shifters(B)
This concerns when prices increase
particularly on the basic goods. Consumer Expectations

These are not constant and invariant over

time, but shift steadily. Consumer Tastes and Preferences

This is when the price of a good falls

demand also decreases because the
consumer can maintain the Consumer Income
same consumption for less expenditure,
providing that the good is normal.

The ______describes the means by which decisions taken by consumers and

businesses interact to determine the allocation of scarce resources between competing
uses.
Price mechanism

Match the statement (A) to Suppliers shifters to(B).

Unlike their consumer counterparts,
producers are constantly thinking about
Prices of Related Goods
their options.

A new technology can reduce per unit Cost of Production

 costs of production, firms are still able to
make money selling at a lower price than
before.

Most decisions about production and

selling are typically made long before a
product is ready for sale. Producers Expectation

Ppt 1
Microeconomics

- studies how individual consumers and firms make decisions to allocate

resources. Whether a single person, a household, or a business, economists
may analyze how these entities respond to changes in price and why they
demand what they do at particular price levels.
- Microeconomics analyzes how and why goods are valued differently, how
individuals make financial decisions, and how they trade, coordinate, and
cooperate.
Production
- is the creation or addition of utility – total satisfaction received from consuming a
good or service. In order to create production, there must be usage of economic
re-sources. Economic resources are the goods or services available to produce
end user products, also called factors of production
1. Land 2. Labor 3. Wage 4. Salary 5. Capital 6. Entrepreneurial
Distribution
- is the allocation of the total product (money incomes) among factors of
production. In general theory, each unit of output corresponds to a unit of
income.
Land – RENT Labor – WAGES Capital – INTEREST Entrepreneurship – PROFIT
Consumption
- is the utilization of a good or a service for one’s very own satisfaction. Without it,
there would be no need for production and distribution since the goal of
economics is to suffice the consumer wants and needs. It deals with the concept
of destroying utility.
Opportunity cost
 - is the foregone value of the next best alternative – the value of things we give
up.
Production Possibilities Curve
- is a curve that illustrates the production possibilities for the economy.
- A production possibilities curve represents the frontier of the economy’s
production abilities. As a frontier, it is the maximum production possible given
obtainable resources and technology.
Full employment
- is when a society’s available human resources are being maximized efficiently. It
is a condition of an economy in which all qualified people who want to work can
find employment at customary wage rates.
Full production
- is when resources ae being allocated in the most efficient manner. All employed
re-sources are used so that they provide the maximum possible satisfaction of
our material wants.
- Full production an include physical resources (land and capital) and human
resources (labor and entrepreneurial)
Productive efficiency
- occurs only when we are operating on the production possibilities curve. It means
that the output of one good cannot be attained without reducing the output of
some other.
- Productive efficiency is an economic level at which the economy can no longer
produce additional amounts of a good without lowering the production level of
another product. It is the ability to produce a good using the fewest resources
possible.
Law of Increasing Cost
- as the output of one good expands, the opportunity cost producing additional
units of this good increases You give up fewer units of candies to get 1 unit of
chocolates up top.
Economic growth

- is an increase in the capacity of an economy to produce goods and services,

compared from one period of time to another. Economic growth can be
measured in nominal terms which include inflation or in real terms which are
adjusted for inflation.
Gross national product (GNP)
 - is an estimate of the total value of all the final products and services turned out
in a given period by the means of production owned by a country's residents.
- GNP is commonly calculated by taking the sum of personal consumption
expenditures, private domestic investment, government expenditure, net exports,
and any income earned by residents from overseas investments, minus income
earned within the domestic economy by foreign residents.
Land
- It includes any natural resources used to produce goods and services, such as
mineral, oil, coal, water, and forest.
Labor
- This is the effort that people contribute to the production to the production of
goods and services.
Wage
- This is a fixed regular payment, typically paid on a daily or weekly basis, made by
an employee, especially to a manual or unskilled worker.
Salary
- This is a fixed regular payment, typically paid on a monthly or biweekly basis but
often expressed as an annual sum, made by an employer to an employee,
especially a professional or white-collar worker.
Capital
- it comprises resources including manufacturing unit/plant, tools, equipment and
machinery, raw materials and finished good.
Entrepreneur
- Is a person who bring other factors of production in one place.
Ppt2-3
Mixed economic system
- is a system that combines aspects of both capitalism and socialism.
- mixed economic system protects private property and allows a level of economic
freedom in the use of capital, but also allows for governments to interfere in
economic activities in order to achieve social aims.
three fundamental questions:
(1) What to produce? (2) How to produce (3) For whom to produce?
The Invisible Hand Theory
 - is a market force that helps the demand and supply of goods in a market to
reach equilibrium automatically.
- The Invisible Hand Theory was introduced by Adam Smith in, his book. The
Wealth of Nations (1776).
Price Mechanism
- The price mechanism describes the means by which decisions taken by
consumers and businesses interact to determine the allocation of scarce
resources between competing uses. This plays three important functions in a
market.
Signaling Purposes
- Prices perform a signaling function – they vary to demonstrate where resources
are required and not. When prices fluctuate, we could determine whether it
reflects scarcity or surplus. If prices are rising because of high demand from
consumers, this is a signal to suppliers to expand production. If there is an
excess supply in the market the price mechanism will help to eliminate a surplus
of a good by allowing the market price to fall
Change of Preferences
- Producers are able to gather information about the changing nature of wants and
needs through consumers choices. Higher prices act as an incentive to raise
output because the supplier will take advantage of making a better profit.
Measuring Function
- Prices serve to measure scarce resources when demand in a market exceeds
supply. When there is a shortage, the price is bid up – leaving only those with the
willingness and ability to pay purchase the product. Be it the demand for limited
slots for a concert of a well-known performer, the market price acts a rationing
device to equate demand with supply.
Competition, Trust, Equity and Efficiency
- To allow price mechanism work, there should be competing entities in the
industry. If markets would not be competitive enough, then the price system
would not work justly and the invisible hand becomes more obscured.
The circular flow Diagram
- is a model used to show how economy functions.
The economic role of government
- can best be explained by taxonomy of its economic policy aims. The government
influences economic activity through two approaches:
Monetary Policy
- is a kind of policy where the government regulates the money supply and level of
interest rates.
• Fiscal policy
- is a kind of policy where government uses its power to tax and to spend.
Market Failure is a situation
- where the private sector cannot able to allocated efficiently by our resources by
means of using price mechanism or when the operation of market forces leads to
a welfare loss
Government Failure
- is a condition where the government has failed to allocate resources was unable
to meet their objectives. It may range from minor problems where intervention is
merely ineffective, to cases where intervention produces new and more serious.
The following are the cases of market failures:
Conflict of interest:
- The chase of self-interest between politicians and civil servants may lead to a
misallocation of resources. For instance, conclusions about where to build roads
may be upon the favor only of the politician resulting to off-qualify roads so that
they could have higher kick-backs.
Politics myopia:
- Politicians has that tendency to look for short term solutions rather than making
considered analysis of long-term considerations. For example, a choice to build
more roads might simply add to the problems of traffic congestion in the long run
encouraging an increase in the total number of cars on the roads.
Regulatory Capture:
- Industries under the control of a regulatory body operates in favor of the interest
of producers rather than consumers.
Economic Systems
- define how market entities and market forces interact. There are four primary
types of economic systems in the world: Capitalism, Socialism, Communism and
Fascism.
Types of economic system
Capitalism
 - An economic system where private ownership and control is allowed in accord
with their own interests and minimize its profits base on its discretion.
Communism
- An economic and social system in which where there is no private property. It
involves the absence of social classes, money and the state.
Socialism
- An economic and political system that pursue to reallocate the wealth more
equitably by the collection ownership of natural resources and major industries,
such as public utilities.
Fascism
- An economic and governmental system led by a dictator where private ownership
of a means of production exists but the government has a strong centralized
power for planning.
ppt4
Demand
- is an economic principle that refers to consumer’s desire and willingness to pay
for a specific good or service. It is the relationship between the quantities of a
good or service consumers will purchase and the price charged for that good.
- Demand is not simply a quantity consumer wish to purchase such as 15
chocolates or 7 books, because demand represents the entire relationship
between quantities desired for a good at a given price is known as the quantity
demanded
Demand Curve:
- A Demand curve is simply a demand schedule presented in graphical form. It
shows the quantity demanded at different prices.
- Demand curves are drawn as ‘downward sloping’ due to this inverse relationship
between price and quantity demanded. When there is a change in quantity
demanded there has a movement along the curve
Individual Demand
- The Individual demand is the demand of an individual or any entity considered as
one. It is the quantity of a good that a specific consumer would purchase at a
specific point at a specific point in time.
Market Demand
 - Market demand supports the total quantity demanded by all consumers. It is an
important economic indicator because it displays the one’s market
competitiveness, a purchaser’s willingness to buy certain products, and the ability
of an entity to leverage in a competitive environment. If market demand is low, it
signals to a company that they should lay off a product or services or consider
redesigning it.
Change in Demand:
- There is a change in demand when the change alters the quantity demanded in
a given price, vice versa. When it happens, there is a shift in the entire demand
curve.
Alfred Marshall
- A great English economist who came up with the idea of the law of demand and
supply. According to him, prices are set through the forces of demand and supply
as same as the cutting done by two blades of scissors. Just as you need two
blades in order for the scissor to function, as so as to
Supply
- is the total quantity of a good that is available for purchase at a given price. It is
the relationship between the quantities of a good or service consumers will offer
for sale and the price charged for that good.
- The law of supply states that ceteribus paribus (latin for assuming all else is held
constant’), the quantity supplied for the goods rises as the prices rises. In other
words, the quantity demanded and price are directly proportionate.
Supply Curve:
- A supply curve is simply a supply schedule presented in graphical form. It shows
the quantity supplied at different prices.
Price Floor and Price Ceilings
- Price Floors and Price Ceilings are examples of regulations established by
government intervention to avoid loss and taking advantage of opportunity in the
market.
Price Floor
- Price Floor is the minimum market price set for a certain commodity established
to prevent manufacturers in instituting prices that would ruin the market economic
system. For instance, different rates of minimum wages are implemented in
different geographic area in accordance to the lifestyle of the household in the
location.
Price Ceiling
 - is the minimum market price set for a certain commodity and services that is
believed to be sold at unreasonably high price. It only becomes a problem when
they are set below the marker equilibrium price because there would be excess
demand or a supply shortage. Manufacturers won’t produce as much and
consumers will demand more.
Equilibrium
- refers to a situation in which the price has reached the level where quantity
supplied equals quantity demanded.
Ppt4
Elasticity
- is the amount of a variable’s sensitivity upon change of a further variable.
Economically, elasticity refers to the degree of change of individual demands in
reaction to price or income changes.
Elastic Demand
- Quantity demanded extremely reacts when there is a change in price. An
example of products with an elastic demand is those goods not frequently
purchased, such as appliances and furniture and can be deferred if price rises.

Inelastic Demand
- A change in price results in only a small change in quantity demanded. Simply
the quantity demanded is not very responsive to price changes. Examples of this
are daily necessities such as food. When the price of food increases, consumers
will not reduce their food purchases, granting there may be shifts in the types of
food they purchase.
Unitary Elasticity
- A change in price will result to an equal percentage of change in quantity
demanded. Thus, the elasticity coefficient is equal to one.
The total revenue
- a firm obtains is the price of the good multiplied by the quantity sold.
Income Elasticity of Demand
- Income elasticity of demand measures the relationship between a change in
quantity demanded for good and a change in income.
Normal goods
 - are goods that have proportionate response on its demand as income changes.
These goods have positive income elasticity. Example might be luxury items as;
as the income level increases, more people buy or demand them.
Inferior goods
- are the goods that have inverse response on its demand as income changes.
Thus, it has negative income elasticity. Typically, inferior goods exist when high
class or superior goods are available in the market. An example, of an inferior
good is public transportation. When consumers have less wealth, they may forgo
using their own forms of private transportation in order to cut down costs.
Cross elasticity of demand
- is an economic concept that determines the degree of sensitivity in the quantity
demanded of one good when a change in price takes place in another good.
Elasticity of Supply
- The analysis and calculation of elasticity of supply is similar to elasticity of
demand, except that the quantities used refer to quantities supplied instead of
quantities demanded. Supply elasticity is the ratio between change in quantity
supplied and the percentage change in price.