micro

• NATURE OF ECONOMICS

  1. It is a social science concerned with the efficient use of scare resources to

  achieve the maximum satisfaction of economic wants.

  b. It is concerned with obtaining maximum satisfaction through the efficient

  use of scare resources

  c. Area study by Economic are the economic behavior and economic

  relationship

  d. The economic perspective stresses:

   Resources scarcity and the necessity of making choices

   The assumption of rational behavior

   Comparisons of marginal benefit and marginal cost
• Economic wants


  Far exceed the productive capacity of our limited or scarce resources
• The complete satisfaction of society's economic wants is impossible
• Positive Economics


  • Focuses on facts and cause-and-effect relationship
  • Includes description, theory development, and theory testing (theoretical economics)
  • Avoids value judgments, tries to establish scientific statements about economic behavior and deals with what the economy is actually like
  • Concern what is
• Normative Economics


  • Incorporates value judgment about economic about what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal
  • Looks at the desirability of certain aspects of the economy
  • Embodies subjective feelings about what ought to be
• Three Economic Problems


  • What are the products and services to produce?
  • How to produce?
  • For whom to produce?
• Factors of Production


  • Land - all natural resources used in the production process
  • Capital - includes all manufactured aids used in producing consumer goods and services, including tools, machinery, and distribution facilities
  • Labor - all the physical and mental talents of individuals available and usable in producing goods and services
  • Entrepreneurial Ability - special human resources, distinct from labor, who combine the other economic resources for use in production
• Investment


  The process of producing and purchasing capital goods
• Consumer goods


  Satisfy wants directly
• Capital goods


  Satisfy wants indirectly by aiding the production of consumer goods
• Basic Economic Goals


  • Economic growth - produce more and better goods and services, or develop a higher standard of living
  • Full employment - provide suitable jobs for all citizens who are willing and able to work
  • Economic efficiency - achieve the maximum fulfillment of wants using the available productive resources
  • Price-level stability - avoid large upswings and downswings in the general price level; avoid inflation and deflation
  • Economic freedom - guarantees that businesses, workers, and consumers have a high degree of freedom in their economic activities
  • Equitable distribution of income - ensure that no group of citizens faces poverty while most others enjoy abundance
  • Economic security - provide for those who are chronically ill, disabled, laid off, aged, or otherwise unable to earn minimal levels of income
  • Balance of trade - seek a reasonable overall balance with the rest of the world in international trade and financial transactions
• Macroeconomics


  • Examines either the economy as a whole or its basic subdivisions or aggregates, such as the government, household, and business sectors
  • Aggregate is a collection of specific economic units treated as if they were one unit
  • Using aggregates, macroeconomics seeks to obtain an overview, or general outline, of the structure of the economy and the relationships of its major aggregates
  • It speaks of such economic measures as total output, total employment, total income, aggregate expenditure, and the general level of prices in analyzing various economic problems
• Microeconomics


  • Looks at specific economic units
  • Examines the sand, rocks and shells, not the beach
• Economic Systems


  • Traditional Economy - very backward, production, trading and distribution sanctioned by custom, methods of production carried over from forefathers, religious and cultural values over economic activity
  • Capitalism or Market System - resources privately owned, independent buyers and sellers, competition, prices guide production
  • Command Economy - government owns means of production, government dictates what, how, and for whom to produce, no private or individual production and consumption, government dictates prices
  • Mixed System - combination of market and command economy, few countries have a pure economic system
• Pure Competition


  Also known as laissez-faire capitalism, government's role limited to protecting private property and establishing an environment appropriate to the operation of the market system and keep government from interfering with the economy
• Capitalism or Market System

   Market system refer to capitalism system

   Resources are privately owned and the people themselves

  make decisions

   Also known as market economy

   There are many independent buyers and sellers of each

  product and resources therefore competition arises giving

  height to consumer sovereignty

   Price of a good is basis for the producers to know
• The Command Economy

   Government owns the means of production

   Government dictates what, how, and for whom to produce

   All the capital resources and consumer goods are being

  divided to its citizenry

   No private or individual production and consumption

   Government dictates the price
• Mixed System

   There are only few country that has a pure economic system

   The Philippines applies three form of economic system
• Economic growth – produce more and better goods and services, or,

  more simply, develop a higher standard of living
• Full employment – provide suitable jobs for all citizens who are willing

  and able to work

  c. Economic efficiency – achieve the maximum fulfillment of wants using

  the available productive resources
• d. Price-level stability –avoid large upswings and downswings in the

  general price level; that is, avoid inflation and deflation

  e. Economic freedom – guarantees that businesses, workers, and

  consumers have a high degree of freedom in their economic activities
• f. Equitable distribution of income – ensure that no group of citizens

  faces poverty while most others enjoy abundance

  g. Economic security – provide for those who are chronically ill, disabled,

  laid off, aged, or otherwise unable to earn minimal levels of income

  h. Balance of trade – seek a reasonable overall balance with the rest of the

  world in international trade and financial transactions
• BASIC ECONOMIC GOALS

  If economic policies are designed to achieve certain economic goals,

  then we need to recognize a number of goals that are widely accepted in the

  United States and many countries.
• Entrepreneurial Ability – special human resources, distinct from

  labor

  1. he is the person who combines the other economic

  resources for the use in the production of goods and

  service