applied eco Flashcards
insufficiency of
resources to meet the wants of consumers and insufficiency
of resources for producers that hamper enough production
of goods and services.
scarcity
s the reason why people must practice economics.
scarcity
as a study is the social science that involves the use of
scarce resources to satisfy unlimited wants
economics
described
economics as the study of mankind in the ordinary
business of life.
alfred marshall
It examines part of the individual and
social action that is most closely connected in the
attainment and use of material requisites of well-being
economics
a condition where there are insufficient
resources to satisfy all the needs and wants of a
population. Scarcity may be relative or absolute
scarcity
y is when a good is scarce compared to its
demand.
relative scarcity
occurs not because the good is scarce per
se and is difficult to obtain but because of the
circumstances that surround the availability of the good.
relative scarcity
when supply is
limited.
absolute scarcity
A division of Economics that is concerned with the overall
performance of the entire company.
MACROECONOMICS
. It studies economic
system rather than the individual economic units that make
up the economy.
macroeconomics
is about the nature of economic
growth, the expansion of productive capacity and the
growth of national income.
macroeconomics
s concerned with the behavior of individual
entities such as the consumer, the producer, and the resource
owner.
microeconomics
It is more concerned on how foods flow from the business
firm to the consumer and how resources move from the
resource owner to the business firm.
microeconomics
It is also concerned with
the process of setting prices of goods that is also known as
price theory
studies the decision and choices
of the individual units and how these decisions affect the
prices of goods in the market.
microeconomics
, there is a need to make
decisions in choosing how to maximize the use of scarce
resources to satisfy many wants as possible.
choice and decision making
Refers to the value of the best forgone alternative.
opportunity cost
holds true for individuals,
businesses, and even a society. In making a choice, trade-offs
are involved.
concept of opportunity cost
, society has to make four
fundamental choices:
- What to produce;
- How much to
produce; - How to produce
- For whom to produce.
The study of
society and how people behave
and influence the world around
them.
social science
s the means through which society
determines the answers to the basic problems mentioned.
economic system
3 economic system:
TRADITIONAL ECONOMIC SYSTEy
COMMAND ECONOMIC SYSTEM
MARKET ECONOMIC SYSTEM
Decisions are based on traditions and practices upheld over the years and
passed on from generation to generation. Methods are stagnant and
therefore not progressive. Traditional societies exist in primitive and
backward civilizations.
traditional economic system
This is when the authoritative system wherein decision-making is centralized
in the government or a planning committee. Decisions are imposed on the
people who do not have any say in what goods are to be produced. The
economy holds true in dictatorial, socialist, and communist nations.
command economic system
This is the most democratic from of economic system
market economic system
also known as the factors of production, are
the resources used to produce goods and services.
economic resources
Soil and natural resources that are found in nature are not
man made. Owners of lands receive a payment known as rent.
land
Physical and human effort exerted in production. It covers
manual workers like construction workers, machine
operators and production workers, as well as professionals
like nurses, lawyers and doctors. The term also includes
jeepney drivers, farmers, and fishermen. The income
received by labors is referred to as wage.
labor
Man-made resources used in the production of goods and
services, which includes machineries and equipment.
capital
The
owner of capital earns an income
Interest
Why do we need to study economics?
ECONOMICS will help the students understand why there is a need
for everybody, including the government, to budget and properly
allocate the use of whatever resources are available.
deals with what is – things that are
currently happening such as the current inflation rate,
the number of employed labors, and the level of the
Gross National Product.
positive economics
efers to what
should be – that which embodies the ideal such as the ideal
rate of population growth or the most effective tax system.
normative ethics
n overview of what is happening in
the economy that is possibly far from what is ideal.
positive economics
the scientific study of the ownership, use, and
exchange of scarce resources – often shortened to the science of
scarcity.
economics
regarded as a social science because it uses
scientific methods to build theories that can help explain the
behavior of individuals, groups and organizations.
economics
is the application of the economic theories and principles to
address practical issues on the economy.
applied economcis
an interaction between buyers and sellers
of trading or exchang
market
the most common type of market
because it is where we buy consumers goods.
goods market
where the workers offer services and
look for jobs, and where employers look for workers to
hire
labor market
which h includes stock
market where securities of corporations are traded.
financial market
the willingness of a consumer to buy a
commodity at a given price
demand
hows
the various quantities the consumer is willing to buy at
various prices.
demand schedule
how the quantity demanded
of a good depends on its determinants, the most
important of which is the price of the goods itself
demand function
Law of demand
Qd = 6-P/2
e is a
table that shows the
quantity demanded at each
price
demand schedule
s a graph
that shows the quantity
demanded at each price.
demand curve
s a graphical illustration of the demand
schedule, with the price measured on the vertical axis (Y)and
the quantity demanded on the horizontal axis (X).
demand curve
states that a
higher price leads to a
lower quantity demanded
and that a lower price
leads to a higher quantity
demanded.
law of demand
are tools used
to summarize the
relationship between
quantity demanded and
price.
demand curves and demand schedule
s felt when the change in the price of
a good changes consumer’s real income or
purchasing power, which is the capacity to buy
with a given income. In other words, purchasing
power is the volume of goods and services one
can buy with his/her income
income effect
felt when a change in the
price of a good changes demand due to
alternative consumption of substitute goods. For
example, lower price encourages consumption
away from higher priced
substitution effect
which means all other related variables except those that
are being studies in the moment and are held constant,
there is an inverse relationship between the price of a good
and the quantity demanded for that good.
ceteris paribus
As price increases, the quantity demanded for that
product decreases.
law of demand
5 non-price factors
✓ Income
✓ Taste
✓ Expectations
✓ Prices of related goods
✓ Population
a change that shifts the demand
curve for a product
demand shifter
s an economic principle referring to a consumer’s desire to purchase goods and services and willingness to pay a price for a specific good or service. Holding all other factors constant, an increase in the price of a good or service will decrease the quantity demanded, and vice versa.
demand
refers to the quantity of goods that a seller is
willing to offer for sale.
supply
shows
different quantities the seller is willing to sell at various
prices.
supply schedule
n shows the dependence of
supply on the various determinants that affect it.
supply function
supply function is given as:
Qs = 100 + 5P
the microeconomic law that states
that, all other factors being equal, as the price of a good
or service increases, the quantity of goods or services
that suppliers offer will increase, and vice versa
law of supply
that as the price of an item goes up,
suppliers will attempt to maximize their profits by
increasing the quantity offered for sale.
law of supply
s that
a higher price will induce
producers to supply a higher
quantity to the market.
law of supply
s one of the most fundamental concepts
in economics. It works with the law of demand to explain
how market economies allocate resources and determine
the prices of goods and services
law of supply
summarizes the effect price changes
have on producer behavior
law of supply
A schedule or a curve
describing all the possible
quantities that sellers are willing
and able to produce, at all
possible prices they might
encounter in a particular period of
time; supply is represented in a
graphical model as the entire
supply curve.
supply
: the amount of
a good or service that sellers are
willing to sell at a sell at a specific
price; quantity supplied is
represented in a graphical model
on a supply curve.
quantity supplied
: A
movement along a supply curve
resulting from a change in a
good’s price
change in quantity supplied
A movement
or shift in an entire supply curve
resulting from a change in one of
the non-price determinants of
supply
change in supplied
changes
in non-price factors that will
cause an entire supply curve to
shift (increasing or decreasing
market supply
determinants of supply
(also known as factors affecting
supply) are the factors which influence the quantity of a
product or service supplied
determinants of supply
a fundamental economic concept that describes the total amount of a
specific good or service that is available to consumers
supply
These changes are reflected on a single
supply curve and are changes from one point to another point on the
same curve. This is referred to as a movement along the supply
curve. T
Shifts in the Supply Curve
Changes in production cost
and related factors can
cause an entire supply curve
to shift right or left.
supply curve shift
When two or more goods are produced in a joint process and the
price of any of the product increases, the supply of all the joint
products will be increased and vice versa.
price of joint products
Firms which are able to manufacture related products (such as air
conditioners and refrigerators) will the shift their production to a
product the price of which increases substantially related to other
related product(s) thus causing a reduction of supply of the
products which were produced before.
price of related products
Change in expectations of suppliers about future price of a
product or service may affect their current supply.
supplier’s expectation
Improvement in technology enables more efficient production of
goods and services. Thus reducing the production costs and
increasing the profit
technology
therefore increase in taxes reduce supply
whereas decrease in taxes increase supply.
taxes reduce profit
, thus increasing the
profits. Therefore, increase in subsidies increase supply and
decrease in subsidies decrease suppl
Subsidies reduce the
burden of production costs on suppliers,
Increase in resource prices increases the production costs thus
shrinking profits and vice versa
price of resources
is generally the commercial aspect related to
agriculture or agricultural activities and its products
agribusiness
s engaged in the production and operations
of a farm, the manufacture and distribution of farm equipment
and supplies, and the processing, storage, and distribution of
farm commodities
agribusiness sector
s quite diverse as it encompasses input
production, farm operations and management, equipment and
supplies manufacturing, food/non-food processing, trading, and
retailing. B
agribusiness sector
celebrated in the Philippines on May 1,
labor unions and organizations clamor for wage increases.
labor day
a situation in which economic forces
such as supply, and demand are balanced and in the absence of external
influences the (equilibrium) values of economic variables will not change.
economic equilibrium
condition where a market price is
established through competition such that the amount of goods or services
sought by buyers is equal to the amount of goods or services produced by
sellers. T
Market equilibrium
the percentage of people in the
labour force who are unemployed
Unemplyment rate
What is the mathematical equation for
law of demand?
Qd=f-p/2
What is the other term for market
economic system?
Free market
economic system in which the central
government makes all economic
decisions
Command economic system
Similarities of law demand and supply
both explain how price influences quantity supplied or demanded.
The law of supply shows a positive relationship between price and quantity supplied, and the law of demand shows a negative relationship between price and quantity demanded.
Whats the differ between law of supply and demand
