AppEco Flashcards
Aralin AppEco obviously
is a social scienceconcerned with the explanation and prediction of observe phenomena in the society
Economics
is also an applied sciencebecause it uses the scientific method in its explanation, which consists of observing reality and presenting questions and problems to arrive at the formulation of theories and models.
Economics
Studies of markets of goods and services
Microeconomics
Focuses on the behaviour of individuals in the market
Microeconomics
Explains how and why these units make economic growth
Microeconomics
Studies the economy as a whole
Macroeconomics
Focuses on aggregate indicators (such as production,employment, etc.
Macroeconomics
Field of Economics
Microeconomics
Macroeconomics
Consume goods and services /offer production factors
Consumers
Maximize utility
Consumers
Produce goods / demand productive factors
Producers
Maximize profit
Producers
Attempt to maximize the wellbeing of society
The Public sectors
What are the Economic Agents/Stakeholders
Consumers
Producers
The Public Sectors
materialgoods or commodities.
TANGIBLE GOODS
when they arein the form of services. Thoserendered by doctors, engineers,doctors and other professionals
INTANGIBLE GOODS
goods for the ultimate consumption of the consumers.
CONSUMERS GOODS
-used to satisfy the basic needs of man
ESSENTIAL GOODS
-goods which are useful and scarce; with value attached to them and a price has to be paid for their use
ECONOMIC GOODS
-used in the production of other goods and services
CAPITAL GOODS or INDUSTRIAL GOODS
-goods man may do without, but may give comfort and satisfaction.
LUXURY GOODS
Goods according to use
Consumer Goods
Essential Goods
Economic Goods
Capital Goods or Industrial Goods
Luxury Goods
-is a natural resources available to create supply such as raw materials that comes from the ground. It can be a nonrenewable resource;commodities such as oil and gold; and renewable resources, such as timber. Oil is a natural resource, but petroleum gas is a capital good. Farmland is a natural resource, but a shopping center is a capital good
(Land) Land as a factor of production
-is the work done by people-education, skills, and motivation and productivity. Productivity measures how much each hour of worker time produces in output. Workforce receives wage for his labor.
(Labor) Labor as a factor of production
the money that companies used to buy resources; man-made objects like machinery, equipment,and chemicals that are used in production.For example, capital goods include industrial and commercial buildings. A commercial aircraft is an example of a capital good.
Capital as a Factor of Production (Capital or capital goods are capital)
Entrepreneurship develops an idea into a business. An entrepreneur combines the other three factors of production to add to supply. The most successful entrepreneurs are innovative and risk-takers. The income entrepreneurs earn is profits.
➢Entrepreneurship as a Factor of Production
: insufficient resources to supply all the desires and needs of individuals.
Scarcity
: Resources can have more than one possible use
Multiple use
: one resource can replace another in the production of a good or service
Partially replaceable
What are the characteristics of Resources
Scarcity
multiple use
Partially Replacable
Economics is a ____________ concerned with the explanation and prediction of observe phenomena in the society.
social science
Economics is also an________________because it uses the scientific method in its explanation, which consists of observing reality and presenting questions and problems to arrive at the formulation of theories and models
applied science
implies a limited quantity of resources needed in production
Scarcity
The issue of_________ on supply due to limited resources, but unlimited wants, is the ultimate economic problem.
scarcity
therefore, is concerned with the allocation of resources to make the most efficient use of these resources.
Economics,
If there is scarcity of goods in a society, the firms have to make wise decisions on what goods/services should be produced and determine the quantity to be produced.
What to Produce?
The production of goods or services needs effective methods and processes.
How to Produce?
The society would always consider the immediate beneficiary of the goods.
For whom to Produce?
A society uses all its resources for current consumption
What provisions/laws should be made for economic growth?
The Four Basic Economic Problems
What to produce
How to Produce
For whom to produce
What provisions/laws should be made for economic growth?
the quantity supplied is greater than the quantity demanded
Oversupply/surplus –
- The quantity supplied is less than quantity demanded
Shortage/scarcity
or the amount of good or service consumers are willing to purchase at each price.
Demand
is what a buyer pays for a unit of the specific good or service
Price
The total number of units purchased at that price
Quantity Demanded
explains the interaction between the sellers of a product and the buyers. It shows the relationship between the availability of a particular product and the desire (or demand) for that product has on its price
The law of supply and demand
If all other factors remain equal, the higher the price of a good, the fewer people will demand that good
The Law of demand
Factors Affecting Demand
a) income of buyers
b) number of potential buyers
c) preferences
d) complementary products
Factors Affecting Supply
a) Production capacity,
b) production costs such as labor and materials
c) the number of competitors
d) Ancillary factors such as
e) material availability,
f) weather, and
g) reliability of supply chain
is the price at which the producer can sell all the units he wants to produce and the buyer can buy all the units he wants
Equilibrium price or market-clearing price
Where is the Equilibirum point of the demand and supply graph?
where all the lines intersect
This is the term refers to a group of companies that are related in terms of their primary business activities.
Industry
This is the study of firms, industries, and markets
Industrial Economics
aims to aid business men and economists in their decision making
Industrial Economics
happen when there are a large number of producers or sellers who compete with one another to satisfy the needs and wants of an even larger number of consumers.
❖Competitive Markets
is identified as the prime motivator of Economic Activity.
Self-Interest
is identified as the seeking of personal gains of individuals.
Self-Interest
is the regulator of Economic Activity.
Competition
regulates not just economic activity but also the ability to purchase and sell of buyers and sellers respectively
Competition
is the regulator and is the way for sellers to gain their self-interests and that is profit.
Competition
Profits are earned when firms gain revenue which exceeds the costs of production
The profit motive
This is the diminishing of stocks of goods as the good is continuously purchased.
The principle of Diminishability
Consumers are forced to compete with obtain the benefit of the good or service.
The principle of rivalry
This is the exclusion of consumers from gaining the benefit of a product.
The principle of Excludability
Consumers can reject goods if they do not need nor want them
The principle of rejectability
What are the Principles in the Formation of Competitive Markets
The Profit Motive
The Principle of Diminishability
The Principle of Rivalry
The Principle of Excludability
The Principle of Rejectability
is best defined as the organizational and other characteristics of a market
Market structure
his is where the buyers or the consumers dictate the price.
Pure Competition
Another name of Pure competition
Perfect competition
This is where there are many sellers but the sellers act independently from one another
Monopolistic Competition
Another name for monopolistic competition
Imperfect competition
There are many buyers and only a few sellers that do not act independently.
Oligopoly
This happens when there are many buyers and only one seller.
Monopoly
There are no eligible substitutes for the product that they sell.
Monopoly
This happens when there are many sellers but there is only one buyer of that product
Monopsony
This market structure is quite rare.
Monopsony
In this market structure, there are many buyers and only two sellers.
Duopoly
What are the 6 Market Structures
Pure Competition
Monopolistic Competition
Oligopoly
Monopoly
Monopsony
Duopoly
It simple terms it’s the act of combining the factors of production by business firms in order to produce goods and services
Production
– refers to the natural resources. This also refers to our environmental resources like clean air and potable water.
Land
– this refers to the physical and mental abilities used in the production of goods and services.
Labor
– these are the goods that are used in the production of other goods and services.
Capital
– these are the ideas that are used in the production process
Entrepreneurship
Elements of input
Land
Labor
Capital
Entrepreneurship
How many Sellers and buyers do pure competitions have?
Many|Many
How many Sellers and buyers do Monopolistic competitions have?
Many|many
How many Sellers and buyers do monopoly have?
One|Many
How many Sellers and buyers do Monopsony?
Many|One
How many Sellers and buyers do oligopoly have?
Few|Many
How many Sellers and buyers do Duopoly Have?
Two|Many
is when there is an excess demand for the quantity supplied.
shortage
is excess in supply.
surplus
the willingness to buy goods and services should be accompanied by the ability to buy, also called the
“purchasing power
acts as a signal for shortages and surpluses which help firms and consumers respond to changing market conditions.
Price
– price will tend to rise. Rising prices discourage demand, and encourage firms to try and increase supply
If a good is in shortage
– price will tend to fall. Falling price encourage people to buy, and cause firms to try and cut back on supply.
If a good is in surplus
The producers can make what they want and consumers are free to purchase what they want.
Market economy
quantity is less than the demand;
shortage,
measures the responsiveness of the quantity demanded or supplied of a good to a change in its price.
Price elasticity
is the responsiveness of quantity demanded, or how much quantity demanded changes, given a change in the price of goods or services.
Price elasticity of demand
the percentage change in price brings about a more than proportionate change in quantity demanded.
Elastic Demand (PED > 1) -
– is when an increase in price causes a smaller % fall in demand.
Inelastic Demand (coefficient of the elasticity is less than 1)
- When the percentage change in demand is equal to the percentage change in price,
Unitary Elastic Demand
- the PED is =0 any change in price will not have any effect on the demand of the product
Perfectly Inelastic
is the relationship between changes in quantity demanded for a good and a change in real income.
The Income Elasticity of Demand
are those goods for which the demand rises as consumer income rises; positive income elasticity of demand so as consumers’ income rises more is demanded at each price. These goods shift to the right as income rises.
Normal Goods
As income rises, the proportion spent on cheap goods will reduce as now they can afford to buy more expensive goods.
YED IS POSITIVE
– the demand decreases when consumer income rises; demand increases when consumer income decreases)
Inferior Goods
is he effect on the change in demand of one good as a result of a change in price of related to another product
Cross price elasticity of demand
The measure of the responsiveness of quantity to a change in price. It is the percentage change in supply as compared to the percentage change in price of a commodity.
IV. Price Elasticity of Supply(PES)*
If the cost of producing one more unit keeps rising as output rises or ____________ rises rapidly with an increase in output, the rate of output production will be limited.
Marginal Cost-
- Over time price elasticity of supply tends to become more elastic. The producers would increase the quantity supplied by a larger percentage than an increase in price.
Time
- The larger the number of firms, the more likely the supply is elastic. The firms can jump in to fill in the void in supply
Number of Firms
If factors of production are movable, the price elasticity of supply tends to be more elastic. The labor and other inputs can be brought in from other location to increase the capacity quickly.
Mobility of Factors of Production-
- If firms have spare capacity, the price elasticity of supply is elastic. The firm can increase output without experiencing an increase in costs, and quickly with a change in price
Capacity
Determinants of Price Elasticity of Supply
MArginal Cost
Time
Number of Firms
Mobility of factors of production
Capacity
