eCONOMICS

Instructor: Ms. Armie Landrito

I.E.T.I College Alabang
 Branches of Economics
Micro-Economics Macro-Economics
 Studies the decisions  Studies the behavior
made by individual & of not only particular
business concerning the company or industries
the distribution of but whole economy.
resources and prices of
goods & services.
 Branches of Economics
Micro-Economics Macro-Economics
 It deals with a specific  It includes under-
industry or a sector, the standing how
connections of firms & unemployment, price
house holds in the levels, growth rate
market. affects the economy
wide aspects such as
the Gross National
Product (GNP).
 Branches of Economics
Micro-Economics Macro-Economics
 For example,  For example,
microeconomics would macroeconomics would
study how a company look at how an increase/
could lower its prices decrease in net imports
to increase its product would affect a nation’s
demand in the market. capital account.
 Goals of Economics
i
 To strengthen economic freedom. Economic
freedoms include consumer choices, freedom of
occupational choice, freedom to consume or
save, freedom to own properties, and freedom
of enterprise.

- These freedoms are not true if one is denied of his

independence, an individual should have complete
control of what to consume, his choice of work and
where it is located, or which business to undertake.
 Goals of Economics
 Promote economic efficiency. Efficiency is
producing more output with the use of fewer
resources. There are many factors that contribute
to efficiency, such as modern technologies ( new
tools, new machines) and managerial skills.
 Promote economic stability. Stability means
there is no violent ups and downs in the
economy. The goal is a consistent growth in a
changing world, thus, the movement of output
of the economy, employment, and prices of good
and services should be kept at reasonable ranges.
 Goals of Economics
 To improve economic security. To increase
individual security has been an important goal of
economics. The continued existence of the
market economy depends on this economic
security, because incomes are established in the
market place.
 Goals of Economics
 Attaining a high level of growth in the economy.
Economic growth means that the capacity to
produce goods and services is increasing, and it
is growing more rapidly than the population.
 Growth is determined by 2 factors:
(1) Expansion in the resources available in
producing goods and services, such as, a larger
labor force and larger capital stock;
(2) Improved skills and technology, including
managerial and entrepreneurial skills, so that
more goods and services can be produced from
given resources
 Goals of Economics
 Attaining a high level of growth in the economy.

 Government s have two (2) basic responsibilities in

promoting economic growth, and these are:
(1) To provide law and order that will create a
conducive investment climate, such as enforcement
of contracts and preservation of the environment.
(2) To provide public services that the private sector
cannot provide but are important for an expanding
economy.
A common example is adding more people to a job,
such as the assembly of a car on a factory floor.
At some point, adding more workers causes problems
such as workers getting in each other's way or
frequently finding themselves waiting for access
to a part.

In all of these processes, producing one more unit

of output per unit of time will eventually cost
increasingly more due to inputs being used less
effectively.
2017 exchange rate 313,600,000,000x49.91
USD=49.91 Peso = 15, 651, 776, 000,000
15.651,776 Trillion Peso
 TOTAL COST S
The calculation is:
(Average fixed cost + Average variable cost)
x Number of units = Total cost.

For example, a company is incurring $10,000

of fixed costs to produce 1,000 units
(for an average fixed cost per unit of $10),
and its variable cost per unit is $3.
($10 Average fixed cost +
$3 Average variable cost)
x 1,000 Units = $13,000
Total cost
REVENUE vs PROFIT

Kita

EARNED
 Profit is the result of deducting
expenses from the revenue. On the
other hand, revenue can be computed
by multiplying the number of goods sold
with the selling price per unit.
Profit can be of two types –
gross profits (close to operating profit)
and net profit (including the incomes
from other sources).
Revenue is how much a company sells on
a certain time frame. Daily revenue, weekly
revenue, yearly revenue. If you sell 10 cars
at 20k each this month, your monthly
revenue was 200k. If you bought those
cars at 10K each, then your gross profit
was 100k. It's gross profit because it's still
didn't take into account over head such as
employees, advertising, insurance, taxes,
and rent.
 There are 3 key Profit Margin
Ratio:
1. Gross Profit Margin =
(Total Revenue – Cost of goods sold / TR)

2. Operating Profit Margin = EBIT / Sales

EBIT(Earnings before Interest and Taxes)

3. Net Profit Margin =

Net profit after taxes / Sales
 There are 3 key Profit Margin
Ratio:
1. Gross Profit Margin =
(Total Revenue – Cost of goods sold / TR)
Suppose that a company has $1 million
in total revenue and the cost of its labor
and materials amounts to $600,000. Its
gross margin rate would be 40%

($1 million - $600,000/$1 million = 40%).

 There are 3 key Profit Margin
Ratio:
2. Operating Profit Margin = EBIT / Sales

If EBIT amounted to $200,000 and

sales equaled $1 million, the operating
profit margin would be 20%.

($200,000 / $1 million = 20%).

 There are 3 key Profit Margin
Ratio:
3. Net Profit Margin =
Net profit after taxes / Sales
If a company generates after-tax
earnings of $100,000 on its $1 million
of sales, then its net margin amounts
to 10%.

($100,000 / $1 million = 10%).

 Cost–Benefit Analysis (CBA)
• Cost–benefit analysis (CBA), sometimes
called benefit costs analysis (BCA), is a
systematic approach to estimate the strengths
and weaknesses of alternatives (for example in
transactions, activities, functional business
requirements or projects investments); it is used
to determine options that provide the best ...
 Seat work
1. Company ABC has $_____ in sales and the
cost of its goods and labor amounts to
$15,000. Its gross margin rate would be 44%
2. If earnings before Interest and Taxes
amounted to $5,000 and total revenue is
$______, the operating profit margin would
be 1%.
3. If a company generates after-tax earnings of
$200,000 on its $800,000 of sales, then its
net margin amounts to ___%.
 Seat work
1. Company ABC has $27,000 in sales and
the cost of its goods and labor amounts to
$15,000. Its gross margin rate would be
44%
2. If EBIT amounted to $5,000 and total
revenue is $500,000, the operating profit
margin would be 1%.
3. If a company generates after-tax earnings
of $200,000 on its $800,000 of sales, then
its net margin amounts to 25%.
• Social Safety Net – Refers to the programs
and policies in place by a government
meant to alleviate the effects of poverty

• Social Safety Net - programs allow all

people to receive income, health care, and
other.
• Capitalism
Analyze:
– You have two cows.
– You sell one and buy a bull.
– Your herd multiplies.
– You can do whatever you want with
your cows because they're private
property
Thank You…
GOD BLESS
