Microeconomics 2.

Business

 Concerned primarily with the market 4 Forms of Business

activities on individual economic units
 Sole/Single Proprietorship
such as consumers, resource owners.
 Partnership
and business firms.
 Corporation
 Concerned with the flow of goods and
- Stockholders
services from business firms to
- Shareholders
consumers
- Stakeholders
 Also concerned with the flow of
resources ( or services) from resources INTERNAL STAKEHOLDERS
owners to business firms
- Employees
CHARACTERISTICS OF MICROECONOMICS: - Manpower
- Owner
1. Microeconomics looks at the decisions of
individual units. EXTERNAL STAKEHOLDERS

2. Microeconomics, often called as Price Theory - Customer / consumer

- Suppliers
3. Microeconomics is concerned with social
- Investors
welfare.
- Creditors
4. Microeconomics has a limited focus. - Government

5. Microeconomics develops skills. FORMS OF ORGANIZATIONAL STRUCTURE

• Scarcity. It means that there are never enough
resources to satisfy all human wants
• Economics. It is the study of the trade-offs
and choices that we make, given the fact of
 Cooperative – composed of board of
scarcity
• Opportunity Cost. It is what we give up when
we choose one thing over another
4 TYPES OF BUSINESS
3 COMPONENTS OF ECONOMY
 Government
 Business
 Households
1. Government
3 Branches of Government
 Executive (ex. President)
 Legislative (ex. Senators)
 Judicial (ex. Supreme Court)
 Centralized – direct, applicable in
partnership
 Decentralized – indirect, applicable in
corporation
directors, “unanimous agreement”
businesses owned by member-owners.
 WHOLESALING - is the act of buying
goods in bulk from a manufacturer at a
discounted price and selling to a retailer
for a higher price, for them to
repackage and in turn resell in smaller
quantities at an even higher price to
consumers.
 RETAILING - the sale of goods or
services from a business directly to a
consumer for their own use.
 SERVICING - is a company that performs
tasks for the benefit of their customers.
 These tasks can include transportation,
cleaning, traveling, hospitality,
maintenance or consulting.
 MERCHANDISING - is a business that
purchases finished products and resells
them to consumers. Consider your
local grocery store or retail clothing
store.
3.HOUSEHOLDS – one or more person living
in the same dwelling.
 BIR – Bureau of Internal Revenue
- TAX EVASION (illegal)
- TAX AVOIDANCE (legal)
 PSE – Philippine Stock Exchange
 IPO – Initial Public Offering
ECONOMIC ACTIVITY
Man’s Basic Economic Activity:
Man’s basic economic activity consists of efforts
to satisfy human wants with the use of goods
and services.
3 Elements:
1. human wants
> unlimited and vary from the needs of
survival
> man is subject to create wants, develop
them due to the effects of advertising and
consumption as dictated by our culture
2. the use of resources
> basic economic resources consists of land,
labor, capital, and entrepreneurship
> resources are available in limited amounts
> man has to learn to allocate them properly
in order to maximize the number of wants that
can be satisfied
3. Technique of production
> resources are used and combined in
production.
production is described as:
a. capital - intensive (large amt of
investment)
b. labor - intensive (large amt of labor)
> the basic activities of man constitute the
basic exchange that takes place between the
business and the consumers.
RESOURCES PAYMENT
Land Rent
Labor Wage/salary
Capital Interest
Entrepreneurship Profit
CONSUMPTION
> Household is the basic consuming unit in
the economy
> human wants are unlimited
> humans maximize satisfaction through the
proper allocation or mix of expenditures within
the context of budget limitations
The business firm serves as the economy’s
producing unit to satisfy human wants with
goods and services
Some Economic Problems:
1. Unemployment
2. Economic instability that causes highs and
lows in production and investment levels.
3. Low levels of growth and development,
which is more difficult for underdeveloped and
developing nations to rise from their low levels
of income and employment.
 4. Inequality in income distribution resulting in
the concentration of the nation’s wealth in the
hands of a few.

5. Determination of the type of economic

system to be adopted to meet the country’s
peculiar conditions and needs.

Among the best- known economic models is 7

the competitive market or “ supply and
demand.” The supply and demand relationships
can be expressed in three different forms:
> verbal ( or logical )
> mathematical
> graphical
4 TYPES OF ECONOMIC SYSTEM
1. Traditional Economic System – based
on our beliefs, tradition, and culture.
(not welcoming the change)
2. Command Economy – no freedom of
enterprise, everything has been
dictated by government.
3. Market Economy – freedom of
enterprise, they can produce what they
want. It is the place where transaction
occurs, products and services in
exchange for money.
4. Mixed Economy – combination of
traditional, command, and Market
Economy.
DEMAND
- refers to the consumer’s willingness
to buy or purchase product to a
given capacity.
- Part of our needs or wants
- Quantity and quality
- From producers to
consumers/customers.
FACTORS THAT AFFECTS DEMAND
1. Price of product – impactful in demand.
2. Tastes and Preferences – depends on a
person (like go with the flow). It
changes from time to time. Possible to
decrease or increase the sale.
3. Consumer’s Income – plays a huge role
in demand. If the income increase, then
the demand also increases.
4. Availability of Substitutes - If a product
has reliable substitutes in the market,
its demand undergoes a significant
change. The more substitutes available,
the more elastic the demand for the
good or service will be.
5. Number of Consumer in the Market -
demand is determined by how many
people are buying a particular product.
Therefore, the more consumers
available, the greater the demand.
6. Consumers Expectations – expect the
quality of a product on the brand’s
quality.
7. Elasticity – the concept of economics
that change the prices between the
demand.
10 FACTORS THAT INFLUENCE QUANTITY
DEMAND BASED ON PRICE
income, expectation on future prices, prices
of related goods (substitutes/compliments),
size of the population, quality of the
product, tastes and preferences, promotion
and/or advertisements, religion, customs &
traditions, fad or fashion.