Introduction to Applied Economics

Vocabulary terms and definitions covering the fundamentals of economics, factors of production, economic systems, and Philippine socioeconomic issues.

Applied economics

The application of economic theory and econometrics in specific settings with the goal of analyzing potential outcomes.

Demand schedule

Reflects the quantities of goods and services demanded at different prices.

Economics

Social science which deals with the allocation of scarce resources to satisfy the unlimited human wants.

Economic resources

Also known as factors of production, these are the resources used to produce goods and services: land, labor, capital, entrepreneur, and foreign exchange.

Economic system

The framework or organization through which a society decides on and addresses its basic economic problems, such as production, exchange, distribution and consumption of wealth.

Equilibrium price

A condition of balance or equality in the market.

Law of Demand

The principle that the quantity of a commodity which buyers will buy at a given time and place will vary inversely with the price.

Law of Supply

The principle that the quantity offered for sale will vary directly with prices.

Macroeconomics

The branch of Economics that studies the economy as a whole, also known as National Income Analysis; it covers topics like gross national product and levels of employment.

Market

A place where buyers and sellers interact with each other and where exchange takes place among them.

Microeconomics

The branch of Economics that deals with specific units of the economy such as the household and the business firm; also known as Price Theory.

Monopolistic competition

An imperfectly competitive market wherein products are differentiated and entry and exit are easy.

Monopoly

A market situation where a single firm sells a product that has no close substitutes.

Oligopoly

A market dominated by a small number of strategically interacting firms.

Perfect competition

A market structure that implies an ideal situation for both buyers and sellers.

Scarcity

A condition where there are insufficient resources to satisfy all the needs and wants of a population.

Supply schedule

A table or list that shows the different quantities that are offered for sale at various prices.

Land

Natural resources and "free gifts of nature" above, on, and below the ground, such as soil and minerals, which require payment in the form of rent or lease for use.

Labor

Human resources referring to all mental or physical efforts used to produce goods and services, earning income in the form of wages or salaries.

Capital

Finished man-made products used to further production, such as machinery and buildings; the income derived from it is interest.

Entrepreneur

The organizer and coordinator of land, labor, and capital who uses initiative and talent to provide society with goods and services in exchange for profits.

Foreign Exchange

The dollar and dollar reserves maintained within the economy.

Traditional Economy

Also known as a subsistence economy, where people produce goods for their own consumption based on customs and outmoded techniques.

Command Economy

A system where the government owns resources, does economic planning, and dictates what, how, and for whom to produce.

Market System

A capitalistic system characterized by private ownership, free enterprise, and individualism.

Laissez-faire

A French term meaning "let alone," referring to the freedom of business enterprises from government control.

Mixed Economy

A system where both private capitalists and the government play roles in solving economic problems and regulating economic life.

Empirical method

An approach in economics where answers are obtained by studying facts carefully, using math, or studying cause-and-effect relationships.

Generalization

A statement or guess thought to be true in most cases, used because it is impossible to study every specific fact.

Ceteris paribus

A Latin term used in economic generalizations meaning "everything else will stay the same."

Poverty threshold

The minimum income needed to meet both basic food and non-food needs; for a family of five in the first semester of 2018, this was an average of $P10,481$ per month.

Unemployment rate

The percentage of the labor force without work, which reached a record high of $17.7\%$ in the Philippines in April 2020 due to the COVID-19 shutdown.