Applied Economics - is a branch of economics the deals with the application of
economic theory and econometrics in real-world situations.
Ceteris Paribus - “all things being equal”. It refers to the assumption which
controls the effect of other variables apart from those that are being analyzed in the study.
Failure to apply Ceteris Paribus - This is an error in analysis committed when an
individual considers other extraneous variables in studying an economic phenomenon
Post hoc Fallacy - It involves the inference of causality (we assume that, because
one event occurred before another event, the first event caused the second
Fallacy of Composition - This fallacy occurs when one considers a trait of one part or aspect of something as true or applicable for the whole.
Sweeping Generalization - This fallacy refers to a statement that oversimplifies a
specific scenario presenting it as a rule
Production Possibilities Frontier (PPF) - is a graph that shows the greatest sum of outputs given accessible inputs or resources in an economy
Constant opportunitycost - is a situation in which the costs of pursuing a
particular opportunity does not increase or decrease over time
Increasing opportunitycost - is a situation in which the costs of pursuing a
particular opportunity increases over time.
absolute advantage - in producing a good over another country if it uses fewer resources to produce goods.
comparative advantage - when a good can be produced at a lower cost in terms of other goods (opportunity cost)
positive statements - describe what exist and how
things work.
normative statements - depend on values and cannot
be tested.
Economics
- Is the study of the ways that individuals and
societies and allocate their
limited resources to satisfy
their unlimited wants
Social Science -
is the study how people
behave and how they
interact within a society
Economics as aSocial Science
- it studies how people make
choices under the conditions
of scarcity which is one of the
main behavior of a human
being.
Scarcity
- is a situation in which people cannot
have everything that they want because
of limited resources.
Wants - things that are desired which are essential for human survival
Needs - Things that are desired but are
not essential for survival
Land - Refers to all natural resources that
exist without man’s intervention. It compasses all things derived from the
forces of nature such as air, water, forests,
vegetation, and minerals.
Labor - Refers to human inputs such as
manpower skills that are used in transforming resources into different
products that meet our needs.
Capital - is a man-made factor of production used to create another
product. Examples machinery and
equipment used in manufacturing
companies.
Entrepreneurship - is the factor of production that integrates land, labor, and
capital to create new products.
Entrepreneurs - is an individuals who makes decisions with regard to production
and utilizing the other factors for
production.
Market - In this economic system, resources are
owned by private entities.
Command
- In this economic system, resources are
owned by government.
Mixed
- In this economic system, resources are
owned by both government and private entities.
Opportunity Cost
- refers to the cost of giving up an alternative
by selecting the best choice.
Trade Off
- is a situation in which individual must
choose between two things (or activities)
that cannot be had (or done) at the same
time.
Constant opportunity cost - is a situation in which the costs of pursuing a
particular opportunity does not increase or decrease over time
Increasing opportunity cost - is a situation in which the costs of pursuing a
particular opportunity increases over time.