1ST QUARTER FLASHCARDS
It studies how to match limited or scarce resources with unlimited human wants and needs.
Economics
“Economics is the effective management of scarce resources to satisfy ____________ ______& ______.”
unlimited wants & needs
It refers to the limitation of resources, particularly economic resources such as land, labor, capital, and entrepreneurship.
Scarcity
Why do we need to learn to manage our resources?
Because resources will always be scarce and they may be consumed sooner or later without management.
Difference of human wants and needs
Needs are essential for survival while wants are not necessary and only for pleasure.
This is the process of creating goods and services.
Production
A type of institution responsible for the management and allocation of resources used.
Economic System
Components of a market economic system
- Private
- Goods w/ high profits
- Produced at maximum efficiency w/ minimum cost
- Produced to those who can afford to buy them.
Components of a command economic system
- Government
- Public goods
- Employs all possible laborers and available machinery
- Produced for the public
3rd economic system
Mixed (Both market and command)
Why is decision-making important in the aspect of economics?
Because we must determine how individuals or groups of people behave given certain changes in the economy.
Why is decision-making important in the aspect of economics?
Because we must determine how individuals or groups of people behave given certain changes in the economy.
It is the assumption that individuals are consistent and logical in their decision-making, and that they seek an outcome that is most beneficial to them.
Rationality
Difference of opportunity cost and trade-off
Opportunity Cost is the cost of giving up an alternative when making a choice. On the other hand, trade-off is the choice you can no longer undo, and it can either result in satisfaction or dissatisfaction of needs.
It is the application of economic theory and econometrics in real-world situations.
Applied Economics
3 Development Core Values
Sustenance, Self-esteem, and Freedom
Economic development is based on 3 components (from NEDA)
framework of inclusive growth, the generation of employment, and the reduction of poverty
Difference of Positive and Normative Economics
Positive Economics describes what exists and how things work and strives to give an
objective description of the state of things. On the other hand, Normative Economics focuses on the outcome of the economic behavior, makes judgements and proposes courses of action.
These help economists manage information and simplify economic processes so they could be easily understood and studied.
Assumptions in Economics
Individuals act in a logical and predictable manner and pursue goals that will benefit them.
Rationality
Individuals aim to maximize utility while firms intend to maximize their profit.
Profit Maximization
Consumers and producers have completely accurate information on products and services.
Perfect Information
“All things being equal” = the assumption that controls the effect of other variables apart from those that are being studied.
Ceteris Paribus
Faulty reasonings that often make us commit errors in judgment or conclusions.
Fallacy
When an individual considers other extraneous variables in studying the economic phenomenon.
Failure to hold things constant under ceteris paribus
Post hoc ergo, propter hoc = “after this, therefore because of this”
Post hoc Fallacy
When one considers a trait of one part or aspect of something as true or applicable for the whole.
Fallacy of Composition
A statement that oversimplifies a specific scenario presenting it as a general rule.
Sweeping Generalization
It is the gathering information about conditions that affect a marketplace ; basis for making decisions
Market Analysis
Difference of unemployment and underemployment
UNEMPLOYMENT refers to the portion of the labor force that is willing to engage in productive activities yet fails to do so. On the other hand, UNDEREMPLOYMENT is the state of an individual being employed but his/her talents and expertise are underutilized or are not matched to the job.
4 types of unemployment
Structural, Frictional, Seasonal, and Cyclical
2 types of underemployment
Visible and Invisible
It is comprised of the available labor force who are willing and able to work and are awaiting deployment.
Labor Supply
It refers to the industry’s total available job vacancies from the previous cycle or year up to the present.
Labor Demand
It refers to the payments made in exchange for the time and effort exerted or given by an individual who was able to produce a good or service.
Wages
These are different compositions of sellers and distinguishing quality of goods.
Market Structures
Pure Competition’s seller, product, entry of new firm, example, and common problem
Seller: many (price-takers) Product: homogenous/similar Entry of new firm: free Example: sugar Common problem: how to survive and get a fair market share
Monopoly’s seller, product, entry of new firm, example, and common problem
Seller: one (price-taker)
Product: one, with little to no substitute
Entry of new firm: no
Example: telecom
Common problem: improvement of product/service
Oligopoly’s seller, product, entry of new firm, example, and common problem
Seller: few Product: differentiated Entry of new firm: restricted Example: oil, fuel Common problem: high capital requirement
Monopolistic Competition’s seller, product, entry of new firm, example, and common problem
Seller: many Product: differentiated Entry of new firm: free Example: shampoo Common problem: distinguishing quality
It is a product that people buy with hope that they will be beneficial or will generate income in the future.
Investment
2 types of investment and their differenc
A long-term investment is buying a property or real estate and the profit/benefit generated is slow but high, while, Short-term investment is a generating small profit/benefit but frequent, and its problem is the high opportunity cost.
2 types of investment and their differenc
A long-term investment is buying a property or real estate and the profit/benefit generated is slow but high, while, Short-term investment is a generating small profit/benefit but frequent, and its problem is the high opportunity cost.
A factor to consider wherein the total fixed costs and total variable costs are.
Rentals
A factor to consider wherein the total fixed costs and total variable costs are.
Rentals
Why that in the first few months of operation usually, the business is experiencing losses?
Because of the fixed costs which include rent, machinery, and equipment
Increasing cost of living = increasing _________
Minimum wage
It is a significant issue facing by the entrepreneurs ; income in government, loss in businesses
Taxes
