 Government has the monopoly of power to make the people follow.

 Rice Sufficiency: Develop Land for 3-5 years along with Rice importation

Scarcity of Resources + Wants [unlimited and multiple]/Needs [important for survival]

Economics

 Comes from the Greek “oikonomia”- management of household

 Limited resources available
 Unlimited needs of the members
 Study of those activities that involve the production and exchange of good
 Science of choice. Studies of how people choose to use scarce or limited productive resources,
to produce various commodities and to distribute these goods to various members of the
society
 Social Science that studies the optimum allocation, over time of scarce human and non-human
resources among their alternative uses in order to satisfy unlimited wants and desires
 Study of how people and society end up choosing, with or without the use of money, to employ
scarce but productive resources that could have alternative uses, to produce various
commodities and distribute them for consumption, now or in the future among various persons
and groups in society. It analyses the costs and the benefits of improving patterns in resource
allocation.
 Macro- looks society as a whole
 Micro- looks at the components

Positive: statement of facts

Normative: should, must

Problem: Scarcity  Personal and National

Scarcity + Human Wants= Economics

Remember:

 Root problem is SCARCITY

 Scarcity alone does not explain completely the economic problem
 Human Beings have multiple wants and desires thus resources have alternative uses
 Scarce resources need to be allocated among different needs

List down 10 needs/wants, identify whether they are basic or created and cite the factors

A) Wants/needs
B) Basic or created
C) Factor/s influencing the need
Questions:

1) What commodities are being produced and in what quantities?

2) How are these commodities being produced?
3) Who get these commodities and in what quantities?
4) How efficiently are society’s resources being used?
5) Are these resources being fully utilized?
6) Is the economy’s capacity to produce improving over time

The Economic Perspective

 Scarcity and Choice- opportunity cost (making a choice in exchange of another)

 Rational Behaviour
- Human behaviour reflects “rational self”-interest
- Individual look for and pursue opportunities to increase their utility-pleasure, happiness,
satisfaction
- The same person may make different choices under different circumstances
- Assumes that choices vary
- May change as costs and benefits change
- Self-interest is not the same as selfishness
 Marginal Analysis-cost and benefits

Economics and the Social Sciences

 Science is not confined to the physical sciences

 Social sciences are systematized bodies of proved or demonstrated explanations about
observable phenomena
 It is called social because the interest is man and the society in which he lives in
 It is a science because it is utilizes both deduction and induction in explaining various events and
happenings in the economy

The Scientific Methodology

 Social Science is confronted with subject/issue that is influenced by multiple forces

 Stat
 Statements are supported by Empirical evidence.
 Inductive(Specific to General) and Deductive Reasoning

 Important Distinction Between the physical and social science: The use of deductive reasoning:
Philosophy  Deals with MAN

Economics and Other Sciences

  Physical Sciences- have increased the resources available to man
 Philosophy and Theology- philosophical and theological principles serve as value judgements in
choosing among alternative ways of achieving economic goals
 Other social sciences

Relevance of Economics

 Economic for citizenship

 Professional and personal application

Economic wants and the Filipino Citizen

 All men are born with basic needs and desires

 Simple to complex
 Can pertain to the individual, household, social group, national
 Our wants a seek fulfilment and must be satisfied
 When wants are nor satisfies uneasy and frustrate
 Wants can either be economic or non-economic
 Economic wants are greatly
 In highly advanced and industrialized countries, basic economic needs are adequately satisfied
 However these countries face the more serious problems of moral degeneration that an overly
materialistic outlook in life inevitably brings
 The Philippines must be seriously concerned not only with many material or economic problems
but with non-economic problems as well
 Every economic fact of development has its own non-economic implications or consequences

Economic goods:

 Those good and services which exist in limited quantities and can be acquired only at some
effort and cost
 Free goods such as air and sunshine, which can be acquired in unlimited quantities are not
economic good

Factors affecting our needs/wants

 Demonstration effect
- The tendency of the individual to imitate or follow the actions and mannerisms of other
individuals for whom he has certain regard
- Has good and bad influences
 Population growth
- 94 million
- If the average annual growth rate continuous, the population of the Philippines is expected
to double in 29 years
 - With growing population there is greater need for more food, clothes, shelter, education,
health services
- Need to plan to successful meet the present and future needs
- Depends on how we view population growth (positive or negative)
 Rising income
- As we increase our inc0me, our needs increase
- Engel’s Law (Ernst Engel)
= relationship between income and the demand for certain products
= “as income increases”, the percentage of income spent on food decreases while the
percentage spent on non-food items increases
= the applicability depends on the income bracket to which one belongs
 Urbanization
- Rural and urban communities
- In 2000, 40% of the workers are in agriculture. They contribute only some 20% of the
national income
- Low productivity of farm workers
- National consumption patterns are gradually being affected by the tendency of persons to
troop to the cities
- When people migrate to the urban areas they require a new set of wants and demands

Public and Private Wants

 Public wants refer to the needs of the population which cannot be effectively be satisfied by
private business firms
 Public wants compete with the private wants which are normally satisfied through the
production of goods and services by the private sector.

Tools of Economics

 Common sense
- The power to look at a jumble of incidents or facts and to pick out the ones that are the
most important for the study which a person is planning
- The ability to size up incidents, isolate the relevant factors and reject the improbable
explanations
 Imagination
 Memory
 Logical Reasoning
 Mathematical Reasoning
-
Economic Analysis

 Presume the application of scientific knowledge

 Since economics is a social science

Biases:

 Most people bring a bundle a biases and preconceptions to the field of economics
 Some examples: corporate profits are excessive, lending money is always superior to borrowing
money, government is less efficient than businessmen, more government regulation is always
better than less
 Biases cloud thinking and interfere with objective analysis

Loaded Terminology

 Some terminologies can be sometimes emotionally biased or loaded

 High profit “obscene”
 Low wages “exploitative”
 Self-interested “greed”
 Government workers “mindless bureaucrats”

Definitions

 Technical vs Common Usage

 The need to define the terms to avoid misunderstanding

Fallacy of Composition

 What is true for one individual or part of the whole is necessarily true for a group of individuals
or the whole
 Generalization valid in one level may or may not valid at the other

Causation of Fallacies

 Post Hoc Fallacy

- Event A precedes B, therefore A is the cause of B
 Correlation versus Causation
- Correlation between two variables indicates that they are related in some way
- Education and income

Fallacy of Beginning the Question

Elasticity: Sensitivity of a certain product or service to changes in price

Health Sector

General Economic Resources  Economic Resources Specific to Health  Supply of Health Services 
Health Care Services Utilization Demand for Health Care Services Other Health Related and Socio-
Economic Factor Health StatusHealth Care Service Utilization

Asymmetric Information Phenomenon

 Wherein the Producer has more knowledge than the consumer

Supplier and Use Demand

 The Suppliers makes the consumers buy more even if it is not needed

Demand for healthcare services

 Most health goods and services are different from other commodities
 Healthcare services as derived demand
 Individuals rely on health professionals, mainly physicians for decisions
 Healthcare goods and services are both consumption goodsand investment goods

Economic Factors

 Price of the health commodity

 Direct cost
- Direct medical costs
- Direct non-medical costs (Gasoline)
- Indirect/opportunity costs (give up another thing to be able to go to the doctor)
- intangible
 Income
 Value of patient’s time

Socio-Cultural and Demographic Factors

 Role of mothers
- Education (Higher the education attainment, the lower is the expenses for health)
- Mother’s Age(Young: Open to modern medical practices, Old: more apt for traditional
practices)
 Marital Status-Single People
 Locality/Access to Healthcare Facilities
- Rural
- Urban (Better educated, Less distance to health facilities)
 Age and Gender
- The very young and the very old
 - Female more needs due to reproductive needs

Supply of Health Manpower

 Take a long time to produce

 Specialist manpower
 Doctors becoming RNs
 Government figures report that some 2908 Filipino nurses left for 21 countries in the first
quarter of 2002. In the previous year, some 13, 536 Filipino nurses left for 31 countries. Major
destinations were the United Kingdom, Saudi Arabia, and Ireland
 Dr. Marilyn E. Lorenzo, director of the Institute of Health Policy and Development Studies and a
professor at the UP College of Public Health, Said “in absolute terms, there is no shortage. There
are enough warm bodies here, but there is a shortage in terms of quality.”

Supply of Hospital Services

 Primary, secondary, and tertiary

 Quality of Services
- Technology and specialization
- Hospital capacity and geographic location
- Disparity- NCR and the rest of the Philippines
 Drugs
- RA 6675, Generics Act of 1988
- RA 9502, “An Act Providing for Cheaper and Quality Medicines”
 Issues
- Substitution of Inputs
- Supplier-Induced Demand

Population Demographics, Epidemiologic Transition and the Demand for Health Care Goods and Services

 Development of Health Stock

 Health Risks
 Relationship Concepts
- Different ages, there are different probabilities of getting ill
- Different ages, individuals experience different types of illnesses
- Different ages, individuals demand different types of health goods and services

Indifference Curve: Diagram that illustrates the different preferences of an individual

- Curve that convexes to the point of origin

Four Market Models

 Pure Competition
 - Outputs of all forms are indistinguishable from products of other existing firms
(homogeneity)
- There are larger numbers of sellers and buyers of a commodity (Plurality)
- There is perfect mobility of forms and resources

Price Takers/Plurality

- The number of sellers and buyers interdependence of decision making among firms
becomes less important as the number of competitors increases
- When there are many sellers, each selling unit is normally a small fraction of the entire
industry
- It is measured by its effect that no one firm is big enough to throw its weight around.

Free Entry and Exit

- New firms are allowed to join in the productions of the commodity or for existing firms to
cease production
- No barriers but might be established through the collusion of existing producers, size of the
market, highly specialized nature of technology.
- Freedom of entry can b affected by underdevelopment of the capital market

Mobility

- Transfer from one place to another, from one accupation to another etc

Relevance of Pure Competition

Pure Monopoly

-Single Seller
 A single form is the sole producer of a specific good on the sole supplier of a service
- No close substitutes
 Product is unique
 The consumer who chooses not to but the monopolized product must do without it
- Price makers
- Blocked Entry
- Non Price Competition
 Pure Monopoly
 Monopolistic Competition
- Relatively large numbers of sellers
 Small market shares
 No collusion independent action
- Differentiated products
 Product differentiation-product attributes
 Service
  Location
 Brand names and packaging
 Some control over price
- Easy entry and exit
- Economies of scale are few and capital requirements are low
 Oligopoly
- A few large producers
- Homohenous or differentiated products
- Control over price but mutual interdependence
- Entry barriers
- Mergers

Characteristics PC MC Oligopoly PN
# of firms Very large many Few one
Type of product standardized differentiated Standardized or Unique: close
differentiated substitute
Control of price none Some with rather Limited by mutual Considerable
narrow limits interdependence:
considerable with
collusion
Conditions of Wery easy; no Relatively easy Significant Blocked
entry obstacles obstacles
Non price none Considerable Typically a great Mostly public
competition emphasis on deal, particularly relations
advertising, brand with product advertising
names, differentiation
trademarks
Examples agriculture Retail trade, Steel, Local utilities
dresses, shoes automobiles, farm
implements, many
household