TABLE OF CONTENTS

Page

UNIT 1 BACKGROUND OF ECONOMICS

Lesson 1 Key Concepts of Economics
Lesson 2 The Branches of Economics and Theorist
Lesson 3 Resources, Circular Flow and the Market
Structure.
Assessment 1

UNIT 2 THE NATURE, SCOPE AND PRACTICE OF MANAGERIAL ECONOMICS

Lesson 1 Definition of Managerial Economics and its Nature
Lesson 2 Why Managerial Economics is Relevant to Managers
Lesson 3 Managerial Economics is Applicable to Different Types of
Organization
Lesson 4 The Social Responsibility of Business and Social Contract
Assessment 2

UNIT 3 ECONOMIC DECISION MAKING

Lesson 1 Public Decisions: Economic View
Lesson 2 Decision within Firms: Profit maximization
Lesson 3 Cost Concepts and Marginal Analysis
Assessment 3

UNIT 4 DEMAND ANALYSIS: Estimation and Forecasting

Lesson 1 The Law of Demand
Lesson 2 The Law of Supply
Lesson 3 The Demand and Supply Curves and Equilibrium Analysis
Assessment 4
UNIT 5 THE THEORY OF PRODUCTION AND COST
Lesson 1 Production Function and Production Possibilities Frontier
Lesson 2 Three Stages of Production and Returns to Scale
Lesson 3 Cost of Production including Marginal Decisions
Assessment 5

UNIT 6 OPTIMAAL OUTPUT DECISIONS AND PRICINGG STRATEGIIES

Lesson 1 Pure Competition
Lesson 2 Pure Monopoly
Lesson 3 Monopolistic Competition
Lesson 4 Oligopoly
Assessment 6
OVERVIEW:

Every human being whether a child, a student, mother, teacher, entrepreneur and politicians
have been closely related to Economics. Decisions on how to use time, money and efforts to
maximize satisfaction is a daily experience and can be crucial in every transaction. A mother
will not be able to cook breakfast without gas for the stove, wash a laundry without electricity
and even go to her errands if she has no money. In the office, a manager cannot run the firm’s
operation without a secretary, production supervisor and workers. The workers will not be able
to do their work without tools, materials and technology to produce the goods and deliver on
time. How much more, if a firm has no investors and no capital to operate. In the market,
people are waiting to satisfy their wants. This is the reason why we need to know what are
those resources that makes the production complete. Human wants has to be satisfied base on
the attributes of goods and services.
Economics will help the students understand the significance of Greek Economist theories in
the early development of World economy. It will inculcate studies base on the two branches of
economics.
LEARNING OUTCOMES: After the completion of this unit, the students will be able to:

1. Distinguish free resources from economic resources.

2. Explain the importance of an economic activity.
3. Determine the relationship of economic activity with type of market.
4. Explain why we are experiencing scarcity.
5. Identify the elements of human wants

COURSE MATERIAL:
The growth of the Greek society from 200 to 1200BC caused the development of various
theories significant to its development into city-estates. Economics originated from the Greek
word Oikonomia which means household management. Greek personalities contributed greatly
in the field of economics and became the pattern of economic activity. In the History of
Economics
Adam Smith, the Father of Economics” inspired in his first book entitled “The Theory of Moral
Sentiments”, 1976 the theories of famous Greek Economist during the ancient times such as
Plato, Socrates and Aristotle.
Plato's (428 B.C.- 348 B.C.) theory on specialization is an aid to social organization. He also
stated that man’s primary need was for food, shelter, and clothing. the origin of society is found
in the inability of men to be self-sufficient; they lack the ability to serve all their own needs
through their own labor. Each man possesses certain inherent qualities that make him better at
some things than at others. By and through specialization of tasks the members of a community
can improve their material conditions by producing that commodity at which they are most
skilled and trade quantities of it away for the other things that they need from others who are
doing the same. Xenophone (430-354 B.C.E) Xenophone or Xenophon was a Greek
philosopher, soldier, historian, memoirist, and the author of numerous practical treatises on
subjects ranging from horsemanship to taxation. Xenophon’s contribution to Economics include
ideas related to the division of labor and productivity, the efficiency of production, the notion of
diminishing and constant return to scale and the efficiency of management.
Aristotle (384-322 B.C.) Aristotle's economic criticisms are directed at wealth-getting in the
sense of money-making. He disregards the fact that men were able to search for unlimited
wealth even before money came into existence. Although he realized that wanting too much
leads to human failure. he placed a great deal of blame on money because it had no natural
terminus. Aristotle taught that when a man pursues wealth in the form of exchange value he
would undermine the proper and moral use of his human capacities. He failed to mention that
men of commerce provide useful public service and make money only if they do so. In addition,
Aristotle declared the three types of exchange as follows:

• First, Barter, the direct non-monetary exchange of commodities, is natural

because it satisfies the natural requirement of sufficiency. After direct working of
the land, barter between households is the next most natural means of wealth
acquisition. For Aristotle, natural exchange is based on the right to property
being determined by the capacity for its proper use. He sees barter as natural
but inadequate because of the difficulty of matching households with
complementary surpluses and deficiencies. The concepts of surplus and
deficiency are normative and derive from the right of property.
• Second, Transferring of goods between households but mediated by money.
Here each participant starts and ends with use value which he approves of but the item
is not being used in its natural aim or function because it was not made to be
exchanged. Aristotle observes that what is natural is better than what is acquired and
that an item that is final is superior to another thing that is wanted for the sake of this
item.
• Third is retail trade. A person buys in order to sell at a profit. Retail trade is
concerned with getting a sum of money rather than acquiring something that is needed
and therefore consumed. Whereas Aristotle views household management as
praiseworthy and as having a natural terminus, he is skeptical about retail trade
because it has no natural terminus and is only concerned with getting a sum of money.

When money becomes an intermediate element in exchange, the natural limits on

physical wants no longer exercise restraints on a person's desires. The lack of effective
natural restraints leads to the unlimited desire for wealth. There exist no natural
conditions restricting a person's desire to acquire money wealth. Usury is a form of
trade which is known as the begetting of money from money. Aristotle says that the
usurer is the most unnatural of all practitioners of the art of money-making. The lending
of money at interest is condemned as the most unnatural mode of acquisition.

Aristotle's economic criticisms are directed at wealth-getting in the sense of money-making.

He disregards the fact that men were able to search for unlimited wealth even before money
came into existence. Although he realized that wanting too much is a human failure, he placed
a great deal of blame on money because it had no natural terminus. Aristotle taught that when
a man pursues wealth in the form of exchange value he would undermine the proper and moral
use of his human capacities. He fails to mention that men of commerce provide useful public
service and make money only if they do so.
READINGS:

Please read Genesis 3:17-19 of the Holy Bible (New International Version or English
Standard Version). Find out the reason why we experience scarcity.

MEASUREMENT:

1. The students will be given a twenty (20) point quiz via Google Forms at the end of this
unit on Nov. 17th.

REFERENCES:

https://www.fff.org/explore-freedom/article/economic-ideas-plato-aristotle-ancient-greeks-part-1/

https://www.newworldencyclopedia.org/entry/Ancient_economic_thought

http://www.quebecoislibre.org/05/05091511.htm#:~:text=Aristotle%20was%20the%20first%20to
%20draw%20a%20distinction%

http://www.quebecoislibre.org/05/050915-
11.htm#:~:text=Aristotle%20was%20the%20first%20to%20draw%20a%20distinction%20betwe
en%20value,many%20of%20the%20classical%20economists.&text=Nevertheless%2C%20Arist
otle%20is%20one%20of,the%20history%20of%20economic%20thought.

http://www.quebecoislibre.org/05/050915-11.htm
Lesson 1 - Economic Activity

LEARNING MATERIAL:
The field of economics is generally divided into two (2) major parts also known as branches
of economics:
1. Macroeconomics. This part examines the performance of an economy as a
whole. It focuses on the behavior of economic indicators in aggregates, such as
national income and output, employment situation, inflation and general price level; and
taxation situation and the extent of government involvement in the economy.
2. Microeconomics. This part examines the workings of individual industries and
the framework of decision making by individual players in the economy, principally, the
households and the business firms. It also discusses the role of price in the efficient
allocation of resources. (Click https://bit.ly/2DNXnzb)
Display this slide and discuss:

Fig. 1.1

Display slide, and enumerate the three elements involve in the objective of satisfaction, they
are:
1. Human Wants - It is anything that satisfies human being. Its characteristics are
unlimited, varied and insatiable.
2. Use of Resources - The basic economic resources of a nation consist of land,
labor, capital and entrepreneurship. In the beginning, these are free but over the years
man’s population out-numbered these resources. A limited resource has its equivalent
cost, so man has to learn to allocate them properly in order to maximize the number of
wants that can be satisfied. The economy should pay the owners of these basic factor of
production for the use of their resources such as rent for land, wage or salary for labor,
interest for capital and profit for entrepreneurship.
3. Technique of Production – this shows how resources are used and combined in
production. This is employed to reach higher rate of productivity to serve a greater
demand. However, production is described as capital-intensive or labor-intensive
 depending on what factor is predominantly used. Below are examples of advancement
in production caused by the acquisition of technology.
Resources:

What is consumption?
The students are expected to share their opinion in the class. It will be defined as:
• using up of a resource
• the process of buying or using goods and services
• in economics, the use of goods and services by households.
The household is the basic consuming unit in the economics. Since human
wants are said to be unlimited, they maximize their satisfaction through the proper
allocation or mix of expenditures within the context of budget limitation.

For example, a wife who has P2000.00 weekly budget for the food of her husband and child goes to chicken, pork, fish,
oil, onion, garlic, and fruits.
However, a decision to buy a blouse would mean giving up any of the above. The opportunity foregone is called
opportunity cost.
 • it concludes that the price demanded by consumers is the same supplied by
producers. That results in economic equilibrium.

LEARNING ACTIVITY:

1. What is a resource based economy? (To answer during discussion)

2. Watch Jacque Fresco’s “THE VENUS PROJECT” and write a reaction paper of about
50 to 100 words using the activity template. Upload I n Lesson 1 Folder in your google
drive. Submit at 8:00p.m. of November 12, 2022

MEASUREMENT:
Quiz is based on the Work Plan schedule.

REFERENCES:
https://youtu.be/T9c821s9mjw
Jacque Fresco’s Resource Based Economy

Lesson 2 - Price Theory And Economic Theory

What is Microeconomics?

Microeconomics describes the pricing of products and money, causes of different prices to
different people, how can provide more or less benefit to producers, consumers and others, and
how individuals best coordinate and cooperate. This is the reason why microeconomics is also
known as a price theory. Generally speaking, microeconomics provides a more complete and
detailed understanding than macroeconomics.

Basic Concepts of Microeconomics

Display the slide to present the study of microeconomics involves several key concepts,
including (but not limited to):

• Incentives and behaviors: How people, as individuals or in firms, react to the

situations with which they are confronted.
• Utility theory: Consumers will choose to purchase and consume a combination
of goods that will maximize their happiness or “utility,” subject to the constraint of how
much income they have available to spend.
• Production theory: This is the study of production—or the process of converting
inputs into outputs. Producers seek to choose the combination of inputs and methods of
combining them that will minimize cost in order to maximize their profits.
 • Price theory: Utility and production theory interact to produce the theory of
supply and demand, which determine prices in a competitive market. In a perfectly
competitive market, it concludes that the price demanded by consumers is the same
supplied by producers. That results in economic equilibrium.

In this study, the students will realize that resources are limited and because they have a
price, therefore, microeconomics is known as a price theory.

Economic Analysis/Economic Theory

According to Maconnell, economic theory is a body of economic principles built up as a

result of logical reasoning. We can call it a “base of tools” with which the economists analyze
economic problems. Economic theory derives principles from facts which are systematically
arranged and interpreted. “The task of economic theory is to systematically arrange, interpret
and generalizes upon facts”.

Economic theory thus is a statement or a set of related statements about cause and effect,
action and reaction.

Steps for Making an Economic Theory:

The main steps involved in constructing theory of economics are as under:

(i) Selecting the problem. The first step involved in the formulation of a theory is the
selection of problem which is related to the real world.

(ii) Formulation of hypothesis. The second step is to formulate hypothesis of the

economic problem to be analyzed.

(iii) Predictions. The third step required in the construction of a theory is to draw
implications from the assumptions by way of logical reasoning.

(iv) Testing of predictions. Finally, the predictions are tested by the process of observation
and statistical analysis of the data.

The economic theory is extremely valuable in explaining economic phenomenon, predicting

economic events, judging performance of the economy and in formulating economic policies.

The functions of Economic Theory

The principal functions of economic theory falls into 2 categories:
(1) to explain the nature of economic activity and
(2) to predict what will happen to the economy as facts change.

What is an Economic Policy:

Economic policy is an attempt to devise government actions and to design institutions that
might improve economic performance.

The creation of specific policies for achieving economic goals of the society is not simple and
easy matter. The main steps in policy formulation are as under:

Steps for Making an Economic Policy:

(i) Clear statement of goals. There should be clear statement of economic goals to be
achieved.

(ii) Effects of alternative policies. The second step is to examine and consider the possible
effects of alternative policies designed to achieve the economic goal. For example, while
considering the merits and demerits of fiscal policy in the achievement of desired level
employment, the altering monetary policy must remain under examination.

(iii) Evaluation. The third step is to evaluate the effectiveness of the policies. The process of
evaluation should be continuous. If any drawback is found in it at any stage, it should he
improved.

What is an Economic Model

According to Pagoso, Microeconomics is composed of a series of statements of

assumptions or given and statements of implications or deductions. The statement described
the essential features of an item or process and the interrelationships between factors or
variables model.

According to Khan, Economic models are a way of taking complicated ideas and events and
breaking them down into their most important characteristics. We use models in economics so
that we can focus our attention on a few things instead of getting bogged down a lot of details.
In this video, learn more about the role that models play in economics, and the importance of
the assumptions that underlie those models.

An economic model is a simplified version of reality that allows us to observe,

understand, and make predictions about economic behavior. The purpose of a model is
to take a complex, real-world situation and pare it down to the essentials. If designed
well, a model can give the analyst a better understanding of the situation and any
related problems. A good model is simple enough to be understood while complex
enough to capture key information. Sometimes economists use the term theory instead
of model. Strictly speaking, a theory is a more abstract representation, while a model is
a more applied or empirical representation. Often, models are used to test theories. In
this course, however, we will use the terms interchangeably.

The examples of economic theory as follows:

• Circular flow of income and expenditures
• Multiplier Effect
 • Ceteris Paribus Assumption of Demand
• Theory of Consumer Behavior
• Theory of Cost and Profit

REFERENCES:
Introductory Microeconomics (Third Edition) by Pagoso, Dinio and Villasis, 2006
Introduction to Microeconomics by Paraiso, Larano and Cuevas. 2011
https://www.khanacademy.org/search?referer=%2Feconomics -finance-domain
%2Fapmacroeconomics%2Fbasic-economics-concepts-macro%2Fintroduction-to-the-economic-
http://www.economicsconcepts.com/economic_analysis_and_economic_policy.htm
https://www.google.com/search?sxsrf=ALeKk00zn51x -
D0M6Z9KOmI9LKfLnsNzZw%3A1597247168412&ei=wA40X-7kGMfbhwOE0rToBA&q=eco

Lesson 3 - An Overview of the Economy

The students shall understand the relationship of this two in order to give credit on their
functions and how they affect the flow of goods and services in the economy.
The Circular Flow of Economic Activity
 Fig.3.1
Households supply labor to firms and are paid wages in return. Firms use that labor to
produce pizzas and sell those pizzas to households. There is a flow of goods (pizzas) from
firms to households and a flow of labor services (worker hours) from households to firms.

Basic Economic Problems

Display the slide to allow the students understand that it is not easy to determine the most
efficient and effective way of resource allocation. This means that a decision must be made on
how the resources will be used to produce the goods and services which people in the society
need and want. This clarifies that
1. What to produce? This question would answer the decision regarding the type
of goods and services the society desires. It is also important to know whether the
goods to be produced is for consumption or investment.
2. How to produce? This answers the question on the techniques of production
and the manner of combining resources to come up with the desired output.
3. For whom to produce? This question would help the firm to determine the
gender of consumers to answer the problem of distribution. It is the determination of
how output is to be divided or allocated among members of the society.
Types of Economic System
Set the slide and discuss the economic systems which may be classified as traditional,
command or market systems.
1. Traditional Economic Systems. The decisions are made based on customs and
traditions. The basic problems of what, how and for whom to produce are decided
by customs and traditions.
2. Market economy or Free Enterprise Economy or Capitalism. The basic
problems of what, how and for whom to produce are decided by the market system
or simply the demand and supply condition. The factors of production are managed
and owned by private individuals or corporation.
3. Command System or the Centrally Planned Economy or Socialism/Communism.
The economic system here relies on the government to decide how the country’s
resources would be best allocated.
 4. Mixed System or Mixed Economy. This economic system is a combination of
market economy and command economy. Like the Philippines, there is a private
and public ownership of resources.

LEARNING ACTIVITY:
For seatwork, the students may give the characteristics of the four (4) economic systems.

MEASUREMENT:
A ten (10) point quiz on the scheduled date in the work plan.