DISTRIBUTION MANAGEMENT

• The word economy comes from a Greek word for “one who manages a household”
• Equity


  • The benefits of resources are distributed fairly among the members of society
• Decisions require giving up something to get something else
• Tradeoffs


  • Making decisions requires trading off one goal against another
• Scarcity


  • Society has limited resources and therefore cannot produce all the goods and services people wish to have
• Ten Principles of Economics


  1. Who will work?

  2. What goods and how many of them should be produced?

  3. What resources should be used in production?

  4. At what price should the goods be sold?
• Economy


  • Efficient Allocation/Distribution
  • Scarce or Limited Resources
  • Unlimited Needs and Wants of society
• Efficiency


  • Society gets the most that it can from its scarce resources
• Economics


  The study of how society manages its scarce resources
• Cost


  • The cost of something is what you give up to get it
• Increasing the price for efficiency is considered
• Marginal changes


  Small, incremental adjustments to an existing plan of action
• Trade


  Can make everyone better off
• Market failure


  Occurs when the market fails to allocate resources efficiently
• Standard of living


  Depends on a country's production
• Decisions require comparing costs and benefits of alternatives
• Opportunity cost


  What you give up to obtain an item
• People make decisions by comparing costs and benefits at the margin
• Markets


  Are usually a good way to organize economic activity
• Rational People Think at the Margin

  People respond to incentives
• Causes of market failure

  • An externality
  • Market power
• Gross National Product

  Gawa Ng Pilipino
• GDP Per Capita is not a perfect formula for equitable distribution
• The Phillips Curve illustrates the tradeoff between inflation and unemployment: Decrease in Inflation leads to Increase in Unemployment
• Principle #9: Prices Rise When the Government Prints Too Much Money
• People change their behavior in response to the incentives they face
• Ways to measure standard of living


  • Comparing personal incomes
  • Comparing the total market value of a nation’s production
• Almost all variations in living standards are explained by differences in countries’ productivities
• One cause of inflation is the growth in the quantity of money
• MONEY = Goods and Service, Print without Goods and Service Production leads to Demand increase = Price Increase = Inflation
• The cost of any action is measured in terms of foregone opportunities
• Sustainable Development Goals
• Society faces a short-run tradeoff between inflation and unemployment
• Productivity is the ultimate source of living standards
• Markets are usually a good way of coordinating trade among people
• Simple formula for distribution: GDP Per Capita = GDP/POP
• Gross Domestic Product

  Gawa Dito sa Pilipinas
• Principle #8: The Standard of Living Depends on a Country’s Production
• Inflation is an increase in the overall level of prices in the economy
• Productivity is the amount of goods and services produced from each hour of a worker’s time