ECONOMICS

GUIDE TO ECONOMICS FOR FILIPINOS

BY BERNARDO VILLEGAS
 ECONOMICS
CHAPTER 1

Meaning of Economics- is the proper

and efficient use of available
resources for the maximum
satisfaction of human need and
wants
Economics-Greek ”3. oikonomia” –
mgt. of household
Economics as a Science

Economics as a Social Science

 Economics is the study of how to improve
society and make human civilization possible.

 3. Economics is the study of how people

choose to use scarce or limited productive
resources to produce various commodities and
distribute these goods to various members of
society for their consumption
 Economics- is the science that allocates scarce
resources to satisfy human wants.
-is the study of how to improve society and
make human civilizations possible

Importance of Economics
 to have a working knowledge of economics is to
understand a very important part of human life.
 to understand life’s principal preoccupation
 it would make to students and the citizens
economically literate
Division of Economics
 a) Microeconomics – it deals with the economic
be``havior of individual units such as the
consumers, firms and enterpreneurs or the
producers of goods

 Macroeconomics – it studies and

analyzes the over-all aggregates of
the economy-the total employment,
unemployment, money supply, pricing
level and the total output of goods and
services
Assign: 11-18-10
Differentiate Microeconomics and
M acroeconomics
Give examples of thes twoterms
 ASSIGN: 10/6/20

1. What are the different economic system

models? Explain each..
2. Why is there a need to economize? How do
you intend to practice economizing habits?
3. What is poverty line? How can the incidence of
poverty be minimized?
 Factors of Production
1) Land
2) Labor
3) Capital
4) Entrepreneur
* Foreign exchange

Scarcity of resources – is the major economic

problem in the production of wealth, goods and
services.
11. Economics is a positive science which means it
deals with what is.
12. Normative economics deals with what should
be.
 First, the student has to learn how to apply logic
in order to enable him to reason out properly
and to draw conclusions.
 Second, the use of mathematics will enable him
to conceptualize and quantify economic
principles.
 Third, he uses statistics to describe
quantitatively human behaviors and to serve as
empirical evidence in the testing of hypothesis.
 13. my complete name

 . Philosophy of UPHSD
The Tools of Economics
1. Observation-An analyst should be able to
recognize conditions, behaviors and events in the
environment.
2. Definitions and assumptions-The analyst should
describe the specific uses of the study and the
peripheral conditions which affect the economic
behaviors which are being studied
3. Deductions-These are hypotheses or theories
presented for empirical validation.
4. Empirical testing-Deductions have to be tested as
to their validity and correctness.

5. 13. LINDA V. QUICOSA

 Questions to exemplify such limitations:
1) What goods and services to be produced?
2) How much to produce?
3) How shall goods be produced?
4) For whom shall goods and services be produced?

Two essential elements of Economics

 Goods
 Services

Classification of Goods accdg. to their uses:

1) Consumer goods-are those which directly give
satisfaction to people
2) Capital goods-goods which are used in the
production process or in the production of
other goods and services
3) 24. Luxury goods-goods that man may do
without but these are used for their comfort
and well being
4) Economic goods-goods which are useful and
scarce
5) Basic goods-goods which are used to satisfy
the basic needs of man
6) Tangible goods-goods which are in the form
of material goods
7) Intangible goods-goods which you cannot
touched
______________________________________________________________________________________

Want – refers to the likeness of people to

sustain their comfort and well being
Four Economic System Models
1) Capitalism-the factors of production
and distribution are owned and
managed by private individuals or
corporations
- market economy, free enterprise
MASLOW’S HIERARCHY OF NEEDS

SELF-ACTUALIZATION

SELF-ESTEEM NEEDS

SOCIAL NEEDS

SECURITY NEEDS

PHYSIOLOGICAL NEEDS
Assign: June 22, 2011

**Give at least three (3) economic problems

which we encounter in our country right now.
Give your possible solutions to such
problem, and explain.

MaSLOW’S HIERARCHY OF NEEDS

Characteristics of Capitalism:
Private property
Absence of central planning
Economic freedom
Presence of religion (belief in GOD)
Profit motive
Free competition
3. 2) Communism-the factors of production and
distribution are owned and managed by the
state
- command economy, classless economy

 Characteristics:
 absence of religion
 no free competition (government is the sole
source of central planning)
 no economic freedom
 no profit motive
3) Socialism-the combination of
capitalism and communism -the
major and strategic industries are
owned and managed by the state
while the minor industries belongs
to the private sector
4) Traditional economy-the means and ways of
production are generally based on customs,
traditions, and beliefs

Criteria for choosing the Best Economic System

1. Abundance-refers to availability of goods and
services that the individual member of
society receives

2. Growth-the stepping stone to attain

development
3. Stability-the absence of inflation and
unemployment
4. Security-Economic security lies on economic
stability
5. Efficiency-means productivity (can be
acquired thru the application of appropriate
technology, machine, material and
management
6) Justice and Equality-just and equal distribution
of wealth, income, and power among the
members of the society

7) Economic freedom-freedom to do anything we

want (to decide, to buy, to produce, to invest)
Types of Economic Systems
1) Traditional economy
2) Command economy or communism
3) Market economy or capitalism
4) Mixed economy or socialism

Opportunity cost-the value of those alternatives given

up
 Economic Objectives and Goals
 The ultimate objective of economics is to

develop better policies to solve and to cure

our economic problems.
Goals:
1. Provide full employment or a high level of
employment
2. An equitable distribution of wealth income
3. Efficiency
4. Economic growth
5. Economic freedom
6. Price stability
 (Source-Guide to Economics for Filipinos-
textbook)
PopeJohn Paul II writes about
development that is truly human in the
encyclical Sollicitudo Rei Socialis:
* 21. FALSE “In fact, there is better
understanding today that the mere
accumulation of goods and services,
even for the benefit of the majority, is
not enough for the realization of
human happiness.”
* “Nor, in consequence, does the availability of
the many benefits provided in recent times by
science and technology, including computer
sciences, bring freedom from every form of
slavery.”
* “On the contrary, the experience of recent
years shows that unless all the considerable
body of resources and potential is guided by a
moral understanding and by an orientation .....
….. towards the true good of the human race, it
easily turns against man to oppress him”
Summary:
 The science of economics is necessary because

it deals with a basic and continuing problem that

confronts man and society, which is scarcity.
The study of economics affords us an
opportunity to better understand certain social
phenomena that surround and affect us in our
daily lives.

Economics belongs to the general area of study
referred to as the social sciences, a category
different from the physical sciences.

 Asa social science, economics is a systematized

body of proved or demonstrated explanations
about observable phenomena regarding the way
man and society satisfy human needs. …
…
 All men are born with basic needs and wants. As
we grow older, our wants increase and diversify.
These wants can pertain to the individual, to the
household, to a social group or to the national
economy as a whole.

 Apartfrom our basic wants as food, clothing
and shelter, we have created wants. These
wants are not really necessary for our
existence, but we acquire them mainly because
of the power of advertising and the
breakthroughs of scientific research.
 18-21. Our wants are affected by the following
factors:
1. Demonstration effect-the influence of the
consumption behavior of others on our own.
2. Population growth-more people every year
means more wants to satisfy
3. Rising income-a hypothesis called Engel’s
Law states that as income rises, we tend to
allocate a smaller percentage for our food
expenditures, thereby increasing our demand
for nonfood items
 9-12 Maslow’s Hierarchy of Needs
4. Urbanization-agricultural areas that become
progressively industrialized or rural folk moving
to urban areas are exposed to a new
environment and tend to acquire new and
different wants

 18. Public wants refer to the needs of the

population which cannot effectively be satisfied
by private business firms. and they
compete for scarce resources… with the so-
called 19. Private wants which are normally
satisfied through the production of goods and
services by the private sector.
 A technical term used by economists to refer to
economic resources is factors of production, a
term which connotes the elements or ingredients
required in every effort to produce results or
output.

LINDA V. QUICOSA
 Factorsof production are generally classified
into land, manpower, and capital resources.

A special kind of human resource – the

entrepreneur – implements an innovation by
putting the other factors of production
together in a business undertaking.
END OF CHAPTER 1

QUESTIONS????
 STUDY …….

WE HAVE A QUIZ….
PREPARE FOR A QUIZ….
QUIZ- April 3, 2008
1. Meaning of Economics 5
2. Six classification of Goods 6
3. Five Factors of Production 5
4. Four questions which exemplify
the limitation (scarcity of
resources) 4
5. Five criteria in choosing the best
economic system
5
Total = 25 items
ASSIGN:
1. Why do we have economic problems?
Give at least 3 examples of
economic problems in our country,
and give possible solutions to
these problems
2. Why is man considered the
greatest cause of scarcity of
goods?
END OF CHAPTER 2

QUESTIONS?????
PREPARE FOR A QUIZ…
QUIZ – Dec. 5, 2008
1. What’s the ultimate objective of
Economics? - is to develop better policies to
solve and to cure our economic problems.
2. Five goals of Economics
1. Provide full employment or a high level of
employment
2. An equitable distribution of wealth income
3. Efficiency
4. Economic growth
5. Economic freedom
6. Price stability
3. Four Basic economic activities
1. Production
2. Consumption
3. Employment
4. Income generation
4. Five Circular flows of Economic activity
1. Circular flow of Production Process
2. Goods among production units
3. Goods and Income among producers and
households
4. Income
5. Income among production units
6. Physical goods and money income
7. Goods and Income of households and
firms, with the government and foreign
countries
8. Economic activity reflecting the outflows
and the inflows
5. Three inflows in a circular flow
 Exports
 Expenditures
 Investments
6. Three outflows in a circular flow
1. Imports
2. Taxes
3. Savings
7. Three policies which enhance our
nation’s economy
1. Monetary policy
2. Fiscal policy
3. Trade policy
QUIZ – April 8, 2008
1. What’s the ultimate objective of Economics? ( 2)
2. Five goals of Economics
3. Four Basic economic activities
4. Five Circular flows of Economic activity
5. Three inflows in a circular flow
6. Three outflows in a circular flow
7. Three policies which enhance our
nation’s economy
Total = 25 pts.
 =====
CHAPTER 3- DEMAND AND SUPPLY

 The demand and supply are the main

forces that cause prices to increase or
decrease.
Market-a place where buyer and sellers
interact and engage in exchange
Demand-reflects the consumer’s desire
for a commodity
Supply-the amount of a commodity
available for resale
Classification of Length of Time to Production
Process

Short run

Long run
 Competition

 bermudez
 for,ms of orgnization

 bermudez
 Measurement of nztional economy

 Bernardo villegas