APPLIED ECONOMICS

• Scarcity


  Scarcity is the reason why people have to practice

  economics.

  Economics, as a study, is the social

  science that involves the use of scarce resources to

  satisfy unlimited wants.
• Opportunity Cost


  Money or benefits lost by not selecting a particular option during the

  decision-making process.
• Economic Resources


  Land, labor, capital, entrepreneurs, foreign exchange
• Land


  soil and natural resources that are found in nature

  and are not man-made. Owners of lands receive a payment

  known as rent.
• Labor


  physical and human effort exerted in production.

  The income received by labors is referred to as wage.
• Capital


  man-made resources used in the production of

  goods and services. The owner of capital earns an income

  called interest.
• Entrepreneurs


  Organizer and coordinator of other factors of production: land, labor, capital.
• Foreign Exchange


  The dollar and dollar reserves that the economy has.
• Economics as a Social Science


  It is considered a social science in that it studies human

  behavior.

  It studies how individuals make choices in allocating scarce

  resources to satisfy their unlimited wants.
• Unlimited wants - Scarcity - Make choices


  Economics in a process
• MACROECONOMICS


  It is a division of economics that is concerned with the

  overall performance of the entire economy.
• MICROECONOMICS


  It is concerned with the behavior of individual entities such as the

  consumer, the producer, and the resource owner.
• Basic Economic Problems of Society


  *What to produce and how much

  the goods and/or services to be produced

  the quantity of goods to be produced

  *How to produce

  the production method (resource mix and technology)

  *For whom to produce

  the market for the goods and/or services
• Economic Systems


  Traditional Economy

  Command Economy

  Market Economy
• Traditional Economy


  Decisions are based on traditions and practices upheld over the years and passed on from generation to generation. Methods are stagnant and therefore not progressive. Traditional societies exist in primitive and backward civilizations.
• Command Economy


  This is the authoritative system wherein decision-making is centralized in the government or a planning committee. Decisions are imposed on the people who do not have a say in what goods are to be produced. This economy holds in dictatorial, socialist, and communist nations.
• Market Economy


  This is the most democratic form of economic system. Based on the workings of demand and supply, decisions are made on what goods and services to produce. People’s preferences are reflected in the prices they are willing to pay in the market and are therefore the basis of the producers’ decisions on what goods to produce.
• Why Economics Is Important?

  Why there is a need for everybody, including the government, to

  budget and properly allocate the use of whatever resources are

  available;

  How to make more rational decisions in spending money,

  saving part of it, and even investing some of it.
• Positive Economics

  deals with what is—things that are actually happening such

  as the current inflation rate, the number of employed labor,

  and the level of the Gross National Product

  an overview of what is happening in the economy that is

  possibly far from what is ideal
• Normative Economics

  refers to what should be—that which embodies the ideal

  such as the ideal rate of population growth or the most

  effective tax system

  focuses on policy formulation that will help to attain the ideal

  situation
• Gross National Product (GNP)


  Is the market value of final products, both sold and unsold, produced by the resources of the economy in a given period.
• Gross Domestic Product (GDP)


  Defined as the market value of final products produced within the country.
• APPLIED ECONOMICS


  It is the application of economic theory and econometrics in specific settings with the goal of analyzing potential outcomes.
• The Philippines’ Basic Economic Problems


  Unemployment, Poverty, Booming population, Corruption, Lack of education
• Lee Kuan Yew


  He was the prime minister of Singapore from 1959 to 1990. Founding father of Singapore.
• Market


  *It is an interaction between buyers and sellers of trading or

  exchange.

  *It is where the consumer buys and the seller sells.
• Goods Market


  Where we buy consumer goods. (grocery store, sari-sari store)
• Labor Market


  where workers offer services and look for jobs, and where employers look for workers to hire. (JobYoda, JobStreet)
• Financial Market


  Which includes the stock market where securities of corporations are traded. (Bank, Philippine Stock Exchange, Ayala Corporation, SM Prime Holdings)
• Demand


  The willingness of a consumer to buy a commodity at a given price.
• Demand schedule


  Shows the various quantities the consumer is willing to buy at various prices.
• Demand function


  shows how the quantity demanded of a good depends on its determinants, the most important of which is the price of the good itself. It can be expressed by the equation:

  Qd = f (P)
• DEMAND CURVE


  It is a graphical illustration of the demand schedule, with the price

  measured on the vertical axis (Y) and the quantity demanded measured on the horizontal axis (X).
• LAW OF DEMAND


  Thus, as the price increases, the quantity demanded for that product

  decreases and vice versa.
• Ceteris Paribus


  “All things being equal”

  People will buy less of a product if the price is higher
• NON-PRICE DETERMINANTS of Demand.


  They include income, taste, expectations, prices of related goods, and population.
• Wage


  A fixed regular payment, typically paid on a daily or weekly basis, is made by an employer to an employee, especially to a manual or unskilled worker.
• Salary


  The money that someone is paid each month by their employer, especially when they are in a profession such as teaching, law, or medicine.
• Labor migration


  Movement of persons from one state to another, or within their own country of residence, for employment.
• Real Estate


  The land and any permanent structures, like a home, or improvements

  attached to the land, whether natural or man-made. Real estate is a form of real property.