econ

• Economics


  The study of how society uses its scarce resources to satisfy unlimited needs and wants
• Macroeconomics


  Concerned with the aggregate performance of the entire economic system
• Microeconomics


  Concerned with decision-making by individual economic agents such as firms and consumers
• GNP


  Gross National Product
• GDP


  Gross Domestic Product
• Inflation


  A sustained increase in the general price level of goods and services in an economy over time
• Imports


  Goods and services brought into a country from another country
• Exports


  Goods and services sold to another country
• Tariff

  A tax imposed on imported goods and services
• Labor force


  The total number of people employed or actively seeking employment in an economy
• The economic concepts mentioned in this activity were known through the provided definitions and explanations
• Scarcity


  Situation that arises when demand for a good or service is greater than the supply of that good or service
• Market economy


  An economic system where two forces, known as supply and demand, direct the production of goods and services
• Economy


  A system of production, distribution, and consumption of goods and services
• Utility


  The total satisfaction received from consuming a good or service
• Factors of production


  • Land
  • Labor
  • Capital
  • Entrepreneurship
• Land


  Includes natural resources such as minerals, oil, soil, water, and provides sites for factories, hospitals, offices, schools, and homes
• Labor


  The people responsible for the production of a good, including factory workers, managers, salespeople, and engineers
• Capital


  Capital goods such as manufacturing plants, machinery, tools, or any equipment used in the production process
• Entrepreneurship


  The visionaries and innovators behind the entire production process, who combine all the other factors of production
• Circular flow model


  Households purchase goods and services from businesses in the product market, and provide labor to businesses in the resource market
• Supply and demand


  • The quantity supplied of a good and quantity demanded of that good are equal to each other, and the price of that good is determined by the point at which supply and demand are equal
• As price increases


  Supply increases
• As price increases


  Demand decreases
• The point of equilibrium is where the supply and demand lines intersect, revealing the Price at Equilibrium (Pe) and Quantity at Equilibrium (Qe)
• Competition


  Important because...
• What happens if there is no competition?
• Possible solutions to promote competition
• Household behavior and consumer choice


  Includes: Basic set-up, Tastes, Utility theory, Budget constraint, The consumer's equilibrium, Money Illusion and the Effects of Inflation, Interior and Corner solutions
• Perfect competition


  An industry structure in which there are many firms, none large enough to influence the industry, producing homogeneous products. Firms are price takers. There are no barriers to entry. Agriculture comes close to being perfectly competitive.
• Household choice in output markets

  • How much of each product, output to demand
  • How much labor to supply
  • How much to spend today and how much to save for the future
• Determinants of household demand

  • The price of the product in question
  • The income available to the household
  • The household's amount of accumulated wealth
  • The prices of related products available to the household
  • The household's taste and preferences
  • The household's expectations about future income, wealth and prices
• Budget constraint


  The limits imposed on household choices by income, wealth and product prices
• Choice set or opportunity set


  The set of options that is defined by a budget constraint
• Utility


  Total satisfaction received from consuming a good or service
• Marginal utility


  The additional satisfaction or amount of utility gained from each extra unit of consumption
• Total utility


  The aggregate sum of satisfaction gained from consuming a given amount of goods
• Paradox of value


  The contradiction that, although water is on the whole more useful, in terms of survival, than diamonds, diamonds command a higher price in the market

  
• Money illusion


  Individuals usually tend to view their income and wealth in nominal terms, as opposed to real terms
• How inflation affects the budget of ordinary Filipinos