ECONOMIC

DEVELOPMENT
(INTRODUCTION)

Babiano, Pamela Angelica C.

Belen, Antoinette C.
Cabinta, Reyna Ann M.
II-BSA
ECONOMIC AND SCARCITY
 ECONOMIC
• The word economics comes from the Greek word oekonomia, which means
management of the household.
• During the past centuries, the science of economics has developed rapidly beyond the
boundaries of a home.
• Economics is a social science concerned with the production, distribution, and
consumption of goods and services.
• It studies how individuals, businesses, governments, and nations make choices about
how to allocate resources.

ECONOMIC

Macroeconomics Microeconomics

> Focuses on the behaviour of the economy as a whole. > is a study of individual behaviour and entities.
 SCARCITY
• Scarcity in tagalog is “kakapusan/kakulangan”
• Scarcity is the foundation of the essential problem of
economics: the allocation of limited means to fulfil
unlimited wants and needs.
• It is also known as paucity, in economics term it refers
to a gap between availability of limited resources and
the theoretical needs of people for such resources.
 How does Scarcity affect the Economy
Example : Natural Resource Scarcity
 Natural resources can fall outside the realm of scarcity for two reasons. Anything available in
practically infinity supply that can be consumed at zero cost or trade-off of other goods is not scarce.
Alternatively, if consumers are indifferent to a resource and do not have any desire to consume it, or
are unaware of it or its potential use entirely, then it is not scarce even if the total amount in
existence is clearly limited. However, even resources take for granted as infinitely abundant, and
which are free in dollar terms, can become scarce in some sense.

 Air ; From an individual's perspective, breathing is completely free. Yet there are a number of costs
associated with the activity.

 If a government decides to allocate resources to making the air clean enough to breathe, a number
of questions arise. Examples are;
1. Which are the most effective in the short term, medium term and long term?
2. What should be the balance between quality and cost?
3. Should the government raise taxes, and if so, on what and for whom?
4. Will the government borrow? Will it print money? How will the government keep track of its costs,
debts, and the benefits that accrue from the project.
ECONOMIC AND DISTRIBUTION
ECONOMICS
- Is a social science concerned with the production, distribution and
consumption of goods and services. It studies how individual, business,
government and nations make choices about how to allocate resources.

Two Major Type of Economics

Microeconomics- focuses on the behavior of
individual consumer and producer

Macroeconomics- examine overall economies on a

regional, national, or international scale.
Production- refers to process of producing or creating goods needed by the
household to satisfy their needs.

Distribution- the goal in this step is to transport the product

Consumption- spending money for goods in and services in order to yield direct
satisfaction.

Distribution- refers to the sharing of the wealth that is

produced among the different factors of production

- Is the way total output, income, or wealth is distributed

among individuals or among the factors of production(such
as labour, land and capital.
2 Components of Distribution:

1. Personal Distribution “Micro-concept”

-D.W Pearce “Personal distribution refers to individual’s
income regardless of the factors from which income is
derived.

2. Functional Distribution
- Refers to distinct share of the national income received by
the people, as agent of production per unit of time.
Allocation is the process of distributing scarce resources among the different producers of
outputs in the economy, including firms and organizations.

Economies decide what to produce by considering societal needs and wants.

2 Institution Responsible for allocation of resources in the economy:

Market Institution
refers to the institutions where buyers and seller or producers meet. In the market, bidding
between the buyers and sellers occurs until they reach a compromise and agree on the price for
the product.

State Institution
control in economy, the government would determine who gets the product and how much
of it by commanding the seller to sell at a price set by the state and telling the buyers how much
of the product they are allowed to have.
EFFICIENCY AND EQUITY
 Efficiency

• Ability to produce something with

a minimum amount of effort. It
avoids wasting of materials,
energy, efforts, money and time
in doing/producing. Economic Efficiency

• This also requires reducing • Relates to how well an economy

numbers of unnecessary uses scarce resources to meet the
resources use to produce output. needs and wants of consumers.

• Typically term used in

microeconomics in order to denote
the state of best possible operation
of a product or service market.
> >When an economy is economically efficient,
any changes made to assist one entity would harm another.
 Equity
• It is the quality of being fair.
• Equity in economics corresponds to the issue of whether the
distribution of goods and services to individuals and the
profits to firms are fair.
.

This picture here is to clarify the difference

between these two that commonly mistaken
and interpreted as one or the same.
 Why Is Equity Important?
• Some societies view equity as a worthy goal in and of itself because of its
moral implications and its intimate link with fairness and social justice.

• Policies that promote equity can help, directly and indirectly, to reduce
poverty. Equity-enhancing policies, particularly such investment in human
capital as education, can, in the long run, boost economic growth, which,
in turn, has been shown to alleviate poverty.

• Heightened awareness of the discrimination suffered by

certain groups because of their gender, race, or ethnic origin
has focused attention on the need to ensure that these
groups have adequate access to government services and
receive fair treatment in the labor market.
THANK YOU!