MICROECO
The word 'economics' comes from two Greek
words, 'eco' meaning home and 'nomos' meaning
accounts.
Economics is the study of the proper allocation
and efficient use of scarce resources to produce
commodities for the satisfaction of unlimited
needs and wants of man.
Economic Goals
 Economic efficiency
 Economic Freedom
 Economic security and predictability
 Economic equity
 Economic growth and innovation
 Other goals
ECONOMICS RELATED TO OTHER
SOCIAL SCIENCES
 Anthropology – “Anthropos”
and “logus” which means the “study of
group or people”.
 Political Science- “polis” which means
“city” or “sate” and science came from
latin word “scire” which means “to
know”.
 Sociology- word “socio” and
“logus” which means study of society.
 Psychology- word “psyche”
and “logus” meaning soul and study.
 History- It is important in studying
economics not only through systematic
recording of past events but a detailed
and in-depth interpretation of the cause
and effect of past events.
BRANCHES OF ECONOMICS
Micro Economics (Small) - Individual
Macro Economics (Large) – Economy
THE SCIENTIFIC METHOD OF
ECONOMICS
 Data Gathering - It is the process of
gathering and measuring information on
variables of interest,
 Economic Analysis - Data gathered is
useless if not analyzed.
 Economic Conclusions - After laying
down all assumptions, one proceeds to
reasoning in order to generate
conclusions.
REASONING
 Inductive Reasoning
(particular to general}
 Deductive Reasoning
(general to the particular.)
NORMATIVE VS. POSITIVE
Normative economics is concerned with what
one believes ought to be. It values judgment of
what is good and bad, what is true and false. It
describe what is happening to the economy and
why.
Positive economics has something to do with
“what is’. It describes facts and data in the
economy. It is concerned with the development
and testing of positive statements about the
world that are objective and verifiable.
MICROECO
ANCIENT PERIOD: Production possibilities curve (PPC) is a graph that
shows all of the different combinations of output that
 Plato – Theory of Money & Market can be produced given current resources and
 Aristotle - Paradox of Value- “What is technology. Sometimes called the production
rare is greater than good than what is possibilities frontier (PPF), the PPC illustrates
plentiful” scarcity and tradeoffs.
 Xenophone – Memorabilia
3 BASIC ECONOMIC PROBLEM
MIDIEVAL PERIOD:
 What to produce
 Thomas Aquinas –  How to produce
- Lending and Interest  For whom
- Just Price
4 FACTORS OF PRUDUCTION
CLASSICAL PERIOD:
 Land
 Adam Smith – Father of Microeconomics  Labour
 David Ricardo –Political economist &  Capital
Businessman  Enterprise
NEO-CLASSICAL PERIOD: 4 ECONOMIC SYSTEM

 Alfred Marshall– Father of Neo-Classical  Traditional Economic System

 Carl Menger – First Austrian Economist
MODERN PERIOD:
 John Maynard Keynes – Founder of Macro
 Milton Friedman – Economist, Monetarist
 Command Economic System
 Market Economic System
 Mixed Economic System
THE THREE ISM
 CAPITALISM- private owned
 SOCIALISM- community owned
 COMMUNISM- government owned

CIRCULAR FLOW

- Shows connection between firms and

households in input and output market.

Law of Scarcity: cannot produce all goods and

services.

Law of Demand- the higher the price, the lower

the quantity demanded.

Law of Supply- The higher the price, the higher

quantity supplied.

Trade off- when a choice is made by two or

more options.

Opportunity Cost- choosing one option.