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BASIC CONCEPTS-Economics For Upload

The document provides an overview of basic economic concepts. It defines economics as the art and science of efficiently allocating scarce resources to produce goods and services that satisfy unlimited human wants and needs. Key points include: - Resources are land, labor, capital and entrepreneurship. - Goods can be economic (have a price) or free. Production converts resources into goods and services. - Humans seek to satisfy wants and needs, but resources are scarce. Economics studies how to best allocate resources. - The goal is efficient allocation and utilization of resources to maximize satisfaction of wants and needs.

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Anngela Manahan
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© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
29 views

BASIC CONCEPTS-Economics For Upload

The document provides an overview of basic economic concepts. It defines economics as the art and science of efficiently allocating scarce resources to produce goods and services that satisfy unlimited human wants and needs. Key points include: - Resources are land, labor, capital and entrepreneurship. - Goods can be economic (have a price) or free. Production converts resources into goods and services. - Humans seek to satisfy wants and needs, but resources are scarce. Economics studies how to best allocate resources. - The goal is efficient allocation and utilization of resources to maximize satisfaction of wants and needs.

Uploaded by

Anngela Manahan
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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ECONOMICS

BASIC CONCEPTS
Economics - is an art/science of
efficient allocation and utilization
of scarce resources to produce
goods and services to satisfy
unlimited human wants or
needs.

bank.acknowledge.com
• Art - application of
skills/reflective of confidence
• Science – systematized body of
knowledge that is
related/important to daily life.

wallup.net
Art
Ex. Realistic Painting, balanced colors and lines.

Ex. A housewife being able to sustain daily


needs of the family despite meager income
President Aquino skillfully balancing
subsidized fuel (pantawid pasada)/food
(feeding programs) or printing out more
money to lower interest rates with inflation.
Science
Exact = Facts
Ex. Water at 100⁰C = boils water vapor
at < 100 ⁰C > 0 ⁰C liquid
at < 0 ⁰C solid

science.edu
P

Purely competitive
P1 supply curve

Q
P
Monopolistic supply
curve

Q1 Q
Economics - is an art/science of
efficient allocation and utilization
of scarce resources to produce
goods and services to satisfy
unlimited human wants or
needs.
Time in a day…
• 24 hrs. a day 53
• 8 hrs. sleep 33.3% 17.6 years
• 8 hrs. study/work 33.3 % 17. 6
years
• 3 hrs. commute 12.5% 6.6
• 2 hrs. personal things 8.3% 4.3
• 3 hrs. free available time 12.5% 6.6
• Land, labor, capital, entrepreneur
• 5Ms
M – Method
M – Materials
M – Machines
M – Man
M - Moment
• WWII

• Hitler (Jet plane, V2, smart bombs, …)


• Einstein
• Marx
Efficiency

• less wastes or zero waste


• less input producing the same or
greater output newbreedmarketing.com

• technology driven

selfgrwoth.com
• R&D
• Technology
• < 1% GDP
• 3 – 5% GDP
Allocation Vs. Utilization

Allocation is the setting aside of a certain


amount of resource for an intended purpose.
Utilization is the manner in which these
resources were used.

Ex. A big department store should have a


bigger budget than a small one (allocation).
The manner in which it was used (ex. purchase
of more supply of goods) is utilization.
Economics - is an art/science of
efficient allocation and utilization
of scarce resources to produce
goods and services to satisfy
unlimited human wants or
needs.
Scarcity – resources do not always meet the need.
Why? Because:

1. Demand is greater than supply.


2. Non-renewable resources. Ex. Oil.
3. Resources have competing uses.
Ex. Coconut shell for power generation, cooking fuel
or handicraft?
4. Lack of opportunity – doctors and nurses are going
out of the country for better opportunity in the USA.
At the height of demand for nurses abroad, it was
estimated that only about 15% of our doctors and
nurses are remaining in the country.
Resources

Land
Labor
Capital
Entrepreneur
Economics - is an art/science of
efficient allocation and utilization
of scarce resources to produce
goods and services to satisfy
unlimited human wants or
needs.
• Production is the conversion and/or
combination of resources to create
consumable goods/products/services.
Two types of goods: Economic and Free

Economic – processed or manufactured goods


that has a price tag in the market. Ex. Books,
photocopying machines , paper , pen, food
clothes, hair cut, driving lessons, etc.

Free – Sunshine, Polluted Air, A walk in the


park, flood
Economics - is an art/science of
efficient allocation and utilization
of scarce resources to produce
goods and services to satisfy
unlimited human wants or
needs.
Satisfaction – Very abstract. How do
we know we are already satisfied?
If it becomes a habit (Satisfaction is
related to utility or the usefulness of
the product or service).
• Satisfaction – when you are happy with the
product you consumed, no regrets.
• Satisfied – When the anticipated utility is
achieved with respect/reference to its price.
• “Sulit” “Worth it”

• Fried Chicken – P 80.00


300.00
10.00
6 Types of Utility:
youtube.com

Time
Place
Service
Possession
Form
Biological
• 17-25 F/M - looks suitors
Weak = 24 hrs. 22 years 15 years cliques
Family
Hidilyn Diaz – 92 Gold Medal Sprint
• Attitude – lifetime
• 0-5 - 50% -
• 6-18 – 50%
Social – monkeys dolphins
Non-socials –snakes, cuttlefish, sharks
How to Measure Utility
Approaches to measure utility
• Cardinal approach– give it a numeric value
Beauty – 1 -10
Utils – 1-100
Non-parameters
• Ordinal approach – ranking

• Ex . Pepsi 2nd
Mountain Dew 1st
Coke 3rd
Two Type of Data According to
Measurability
A. Parametric – can be measured using standard
measuring units – ex. meters, centimeters,
inches (distance)
grams, kilograms, pounds (weight)

B. Non-parametric
then use the cardinal and ordinal approaches
Economics - is an art/science of
efficient allocation and utilization
of scarce resources to produce
goods and services to satisfy
unlimited human wants or
needs.
Unlimited – as long as one person is alive, he
will consume goods and services.

Wants and Needs

Wants: Things that one can live without, ex. cell


phone, mp3 player, watch, pen, etc.
Needs: Things that one cannot live without, ex.
food, water, shelter, clothes, air, etc.
Externalities
• Externalities – Spill over effects unintended
outcomes of an endeavor

Kinds:
• Positive Externalities
ex. employment/livelihood
• Negative Externalities
ex. pollution/environment
destruction/climate change
• Microeconomics
Managerial Economics

• Macroeconomics
Public Economics
Monetary Economics
Econometrics
Economics
• It’s all about people, hence a social science.
Law of Diminishing Marginal Utility
Flakes in Oil MU (0-100) Hot and Spicy MU

1 100 1 100

2 90 2 95

3 50 3 60

4 20 4 40

5 10 5 20

6 0 6 8

7 -5 7 0
Self-Interest
• Invisible Hand by Adam Smith 1776

cejspr.com

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