econnn

• Economics

  • An inquiry into the nature and causes of the wealth of nations (Adam Smith)
  • The study of mankind in the ordinary business of life; individual and social action which is most closely connected with the attainment and with the use of material required for well-being (Alfred Marshall)
  • The science which studies human behavior as a relationship between ends and scarce means which have alternative uses (Lionel Robbins)
  • A study of how people and society choose, with or without the use of money to employ scarce productive resources which could have alternative uses, to produce various commodities over time and distribute them for consumption now and in the future among various persons and groups of society (Paul Samuelson)
• Branches of Economics

  • Microeconomics
  • Macroeconomics
  • International Economics
  • Public Economics
  • Labour Economics
  • Monetary Economics
  • Development Economics
  • Environmental Economics
  • Industrial Economics
  • Real Estate Economics
• Fields of Economics

  • Econometrics
  • Game Theory
  • Behavioural Economics
  • Experimental Economics
  • Health Economics
  • Urban Economics
  • Agricultural Economics
  • Financial Economics
• Economics of Individual Choice

  • Rational choice
  • Opportunity cost
  • Choosing at the margin
  • Responding to incentives
• Scarcity

  A situation where there is an insufficient or limited amount of resources available
• Choice

  The ability of an individual to make a decision
• There is no such thing as a free lunch
• Examples of Scarcity


  • Limited budget for personal or household consumption
  • Shortage of healthcare medicines and facilities
  • Lack of fertile land to grow crops
  • Limited amount of time rendered
  • Inadequate quantity of imported raw materials
• Opportunity Cost


  The highest-valued alternative that must be forgone when a choice is made
• Wants


  The desires or unnecessary things that can be fulfilled by consuming a good or service
• Needs


  Things such as food, housing, and clothing that are vital for survival
• Economic Resources


  • Land
  • Labor
  • Capital
  • Entrepreneurship
• Microeconomics


  The study of individual economic units (e.g. households, firms) and their behavior and decision-making in specific markets.
• Macroeconomics


  The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.
• Categories of Goods


  • Consumer Goods
  • Capital Goods
  • Intermediate Goods
  • Final Goods
  • Durable Goods
  • Non-Durable Goods
  • Private Goods
  • Public Goods
• International Economics


  The study of economic transactions that cross national borders, including trade and international financial flows.
• Public Economics


  The study of the role of the government in the economy, including topics such as taxation, public goods, and redistribution.
• Labour Economics


  The study of the labor market, including topics such as wages, employment, and human capital.
• Monetary Economics


  The study of the role of money in the economy, including topics such as inflation, interest rates, and monetary policy.
• Development Economics


  The study of economic development and growth in low-income countries.
• Good


  A tangible commodity that is used to satisfy human wants which can be purchased and consumed
• Industrial Economics


  The study of the structure and behavior of industries, including topics such as competition, market power, and regulation.
• Environmental Economics


  The study of the economic impact of environmental policies and the value of natural resources.
• Real Estate Economics


  The study of the economics of real estate markets, including topics such as housing prices, commercial property, and urban economics.
• Free Good


  A good that is not scarce with a zero opportunity cost
• Economic Good


  A good that is scarce and has a price attached to it
• Service


  An intangible equivalent (activities and tasks) of a good that also brings satisfaction to human wants
• Forms of Economic Models

  • Descriptive Model
  • Graphical Model
  • Mathematical Model
• Positive Economics


  Concerned with statements that can be proved by appealing to relevant facts and figures
• Normative Economics


  Requires normative statements that are based on value judgments
• Examples of Positive Economics Statements

  • The GDP of the Philippines is lower than that of Singapore in 2018
  • Increasing the minimum wage results in a higher unemployment rate
  • Recession is a serious economic issue
  • If the government cuts taxes, then the supply of cigarettes will rise
• Economic model


  A simplified framework of reality and representation of economic phenomena
• Economic models


  • Designed to be simple, flexible, and useful to make an easier understanding of how the economy functions partly and as a whole
• Positive economics


  Concerned with statements that can be proved by appealing to relevant facts and figures. It focuses on cause-and-effect relationships and involves theory development.
• Normative economics


  Requires normative statements that are based on value judgments. It concentrates on the formulation of economic policies about what the economy should be like, or what certain policy action should be undertaken.
• Circular flow of income model

  1. Households and Firms

  2. Resource Market and Product Market

  3. Real Flow and Money Flow

  4. Income
• Assumptions of circular flow of income model

  • No government intervention
  • The economy is closed
  • Households spend all their income on goods and services
  • Firms spend all of their income
• Production possibility frontier (PPF)

  • Illustrates the combinations of output the economy can efficiently produce using the available quantity of economic resources
  • The quantity of factors of production cannot be adjusted
  • The economy is at its full capacity using all available resources without waste
  • Only two goods can be produced: consumer good or capital good
  • The state of technology remains unchanged
• Direct relationship


  Positive relationship between variables in which a change in the value of one variable is associated with a change in the value of the other variable in the same direction
• Inverse relationship


  Negative relationship between variables in which a change in the value of a variable is associated with a change in the value of the other variable in an opposite direction