ECONOMICS
- The social science that involves
the use of scarce resources to
satisfy unlimited wants.
Economics Etymology
- From the greek word
“OIKONOMIA”
- Oikos = House , Nomos = Rules
Adam Smith (1723-1790)
- Father of economics
Definition of Economics
● As a study of wealth - Utilization
of wealth for production and
consumption
production - Supply, how to make
Consumption - demand, how to get
● As a study of making choices -
Opportunity cost: forgone
benefits of an alternative when
making choices
● As a study of Allocation -
Allocation of scarce resources to
answer unlimited human wants
● As A Social Science - As a
science, uses the scientific
method of inquiry
- As A social science, uses the
scientific method to study society
Resources and the study of
economics
Natural Resources - Naturally
occurring wealth such as Land, water,
Mineral deposit etc.
Human Resources - refers to the
people who are part of the workforce
both physical and mental.
Physical Resources - Tangible or
man-made resources such as
equipment, materials, facilities,
infrastructure etc.
Raw Materials - Inputs of production
subject to further processing and
transformation
Factor Inputs - transformation inputs
that process raw materials and
intermediate inputs into final goods and
services.
● Categories Of resources
Unskilled - no knowledge
Skilled - you have knowledge on a
certain skill, vocational
Professional - you have knowledge,
this type of work requires extensive
knowledge

● Scarcity as a source of
economic problem
Needs - Essential for you to live such
as: food, water, shelter, clothing etc.
Wants - Desire for non-essential item:
gadgets, luxury items etc.
Goods - Materials that are supposed to
satisfy human wants and provide utility
- Also known as Material goods or
tangible goods
Services - Intangible goods rendered by
either individual or groups
According to uses
● Consumer goods
- Finished products that are
purchased for
consumption bu the
customer (final goods)
● Producer Goods
- Goods manufactured and
used in further
manufacturing, processing
or resale (Capital Goods)
According to Purpose
● Basic Goods
- Things that are needed to
survive
● Luxury Goods
- Products and services
which are not necessarily
needed but which are
likely to make life more
pleasant for consumer
According to Availability
● Economic goods
- Consumable items that are
useful to people but scarce
in relation to their demand
- Commodities or services
that can be utilize to
satisfy human wants
monetary value
● Free goods
- Items of consumption that
are functional to people,
are natuarally abundant
supply, and need no
premeditated or conscious
struggle to acquire them
Economics as an Applied science
(Applied economics)
- The study of economics in
relation to actual and existing
world conditions and
circumstances.
- The application of different
economic concepts, theories, and
principle
- Economic Theory is all about
thinking up, while applied
 Economics is about trying things
out
Basic Economic Problems in 21st
century Philippines
Allocation - Social Mechanism of
disturbing limited resources to meet
expanding human wants
Utilization - to put use; turn to profitable
account
Market System as an Allocation
Mechanism
Market: State where buyers and sellers
transact on the purchase or sale of a
good or service
Price as cost (sacrifice) and benefit
(satisfaction)
3 basic economic questions
1. What to produce?
2. How to produce?
3. For whom to produce
The Distribution of goods and
services in every society depends on
the:
- Availability of resources
- Laws, beliefs, and customs of
people living in the society
Factor that influence the increase of
economic wants
● Population growth
● Rise in income
- Purchasing power
● Advertising
- Introduction and promotion
of products and services
● Urbanization
- Rising growth of cities
● Scientific Invention and
Innovations
Resources are Restricted in two Vital
Aspects
● Inadequate in tangible number
(Land, which has a finite size)
● Inadequate in use ( Man Power,
Machineries and equipment,
which can only be used for one
purpose at any one time and for a
limited time.
Decision Making
- The analysis of identifying and
selecting alternatives based on
the values, priorities and
preferences of the decision
maker

Selecting Logical from the available

options

Whenever alternative choices are

available, consider the following
Application of supply and demand
Analysis

Demand, Supply and Market

● Demand and supply
Supply methods
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