Economics Q1 A

Oikanomia

What Greek word does “Economics” come from?

Fajardo

Economics is the proper allocation and efficient use of available resources for the maximum satisfaction of human wants (allocation and consumption).

Samuelson

Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people (production and distribution).

Nordhaus

Economics studies how people choose to use resources or limited productive resources to produce various commodities and to distribute these commodities for consumption (production, distribution, and consumption).

Because of limited resources (scarcity)

Why do we choose?

Adam Smith, 1776

Father of Modern Economics

Adam Smith, 1776

who wrote An inquiry into the nature and causes of wealth of nation?

Three Questions/Inquiries

1. What

2. How

3. For whom

Microeconomics

Deals with the economic behavior of individual units such as the consumers, firms, and the owners of the factors of production.

Macroeconomics

Deals with the economic behavior of the whole economy or its aggregates.

Household Management

Oikanomia means _____

Economics

A social science that deals with how to allocate scarce resources to satisfy man’s unlimited needs and wants.

Factors of Production or Economic Resources

Basic inputs used in the production of goods and services

1. Land

2. Labor

3. Capital

4. Entrepreneurship

5. Organization

6. Foreign Exchange

What are the factors of production?

Land

Refers to all natural resources found in nature. Owners of land receive payment known as rent.

Labor

Refers to the human resources of production; it covers manual workers and professionals. The income received by laborers is referred to as wage.

Capital

Refers to man-made resources used in the production of other goods and services, which includes machines, equipment, buildings, and constructions. The owner of a capital earns an income called interest.

1. Monetary Resources

2. Major Physical Assets

Types of Capital

Entrepreneurship

is the factor of production involved in combining the different resources/inputs used to produce goods and services. In modern parlance, it's the setting up of a business and of assuming risks to make a profit.

Scarcity

condition of resource insufficiency to satisfy all the needs and wants of a population

because there are not enough productive resources to satisfy people’s unlimited wants. Not only the PH but all nations, that is why engage with foreign exchange.

because it is a choice between what comes first and second with the given sources.

What makes scarcity relative?

Unlimited demand > Limited resources

What causes scarcity?

Opportunity Cost

Refers to the value of the best foregone alternative.

Jean-Baptiste Say

French economist and businessman

Wrote about applying the general principles of political economy

John Stuart Mill

Principles of Political Economy with Some of their Applications to Social Philosophy

Applied Economics

Is the study of observing how theories work in practice

The use of ____ is designed to analytically review potential outcomes

Normative Economics/Statements

TO DO LISTS

Positive Economics/Statements

Concerns what is

Are objective statements that can be tested, amended or rejected by referring to the available evidence

Normative Economics/Statements

Concerns what should be - OPINIONATED

Subjective statements; they carry value judgments

Basic Economic Problems

1. What to produce?

2. How to produce?

3. For whom to produce?