Introduction to Applied Economics Flashcards
The word _________ came from oikanomia or oikonomus, a Greek word meaning household management
economics
The word economics came from ___________ or ________, a Greek word meaning household management
oikanomia or oikonomus
The word economic came from oikanomia or oikonomus, a Greek word meaning _______________
household management
It is the study of what constitutes rational human behavior in the endeavor to fulfill needs and wants or the study that attempts to explain how an economy operates and how the consumer attempts to maximize his/her wants within limited needs
economics
It studies how people use scarce resources to satisfy their unlimited wants
economics
It is the efficient allocation of scarce means of production toward satisfying human needs and wants and the science that deals with managing scarce resources
economics
What is economics?
What are the Three (3) E’s of economics? Explain.
- Efficiency - It is the productivity and proper allocation of economic resources and the relationship between scarce factor input and output of goods and services.
- Effectiveness - It is the attainment of goals and objectives.
- Equity - It refers to justice and fairness.
Explain economics as a Social Science
Economics is a social science because it studies human behavior and how people make decisions to satisfy their unlimited wants by allocating limited resources.
____________ is the study or discipline that aims to explain human behavior.
Social Science
Economics is a _________ because it studies human behavior and how people make decisions to satisfy their unlimited wants by allocating limited resources.
social science
What are the two (2) branches of economics? Explain each.
- Macroeconomics
- It is the study of the economic behavior of the economy as a whole, especially the national economy.
- It focuses on the aggregate flow of goods and resources.
- It examines the causes of change in the overall flow of money, the overall movement of goods and services, and the general use of resources.
- It is known as the analysis of employment and income.
- Microeconomics
- It is the study of economic behavior in particular markets, such as the market for computers or unskilled labor.
- It focuses on the economic behavior of people and businesses, deciding what to buy and sell, how much to work and play, and how much to borrow and save.
- It also studies factors influencing individual economic choices and how markets coordinate decision-makers’ choices.
- It focuses on the behavior of individual entities – the consumer, the producer, and the resource owner.
- It is also more focused on how products move from the business to the customer and how resources flow from the resource owner to the business.
- It is known as the Price Theory – concerned with the process of setting prices of goods.
What are the topics being discussed in two (2) branches of economics?
Topics discussed in macroeconomics:
Gross national product
Employment level
National income
Gross domestic product
General price level
Economic growth and development
Topics discussed in microeconomics:
Principles and elasticity of demand and supply
Individual decision-making
Firm’s costs and outputs
It is the attainment of goals and objectives.
Effectiveness
It refers to justice and fairness.
Equity
It is the productivity and proper allocation of economic resources and the relationship between scarce factor input and output of goods and services.
Efficiency
It is the study of the economic behavior of the economy as a whole, especially the national economy.
Macroeconomics
It is the study of economic behavior in particular markets, such as the market for computers or unskilled labor.
Microeconomics
BASIC DECISION PROBLEMS and Explain
- Consumption
- Having their individual wants, people decide the types of products and services they want to use or consume and the corresponding amount that they should use and buy. Their choices, for instance, are food, clothing, technological gadgets, and whether supplied by the government or privately produced goods. - Production
- They determine the consumers’ needs, wants, and demands and also decide how to distribute their resources to meet customer demands - Distribution
- The government primarily addresses it. There must be an appropriate allocation of all resources benefiting all members of society. - Growth over Time
- As societies grow in number, they continue to live on. The problems of choice, consumption, production, and distribution must be perceived in the context of how they will affect future events.
It is a problem that people have to deal with in their day-to-day activities. Having their individual wants, people decide the types of products and services they want to use or consume and the corresponding amount that they should use and buy. Their choices, for instance, are food, clothing, technological gadgets, and whether supplied by the government (such as health and education) or privately produced goods.
Consumption
They determine the consumers’ needs, wants, and demands and also decide how to distribute their resources to meet customer demands.
Production
The government primarily addresses it. There must be an appropriate allocation of all resources benefiting all members of society.
Distribution
As societies grow in number, they continue to live on. The problems of choice, consumption, production, and distribution must be perceived in the context of how they will affect future events.
Growth over Time
What are the tools of economics? Explain each.
- Logic - a science that deals with sound thinking and reasoning. Facts and evidence should be provided; otherwise, uncertainty will cloud the logic. One could come up with a conclusion with a wise application of logic.
- Mathematics - a science that deals with numbers and operations. It helps economists answer concrete problems involving numbers. To arrive at a conclusion, mathematical equations and operations are used. Among the social sciences, the most quantifiable discipline is economics.
- Statistics - a branch of mathematics that engages with the analysis and interpretation of numerical data. The method of gathering, tabulating, and analyzing data leads to the validity of specific hypotheses. Someone may be able to accept or dismiss (reject) an assumption made on a particular phenomenon.
It is a science that deals with sound thinking and reasoning. Facts and evidence should be provided; otherwise, uncertainty will cloud the _____ . One could come up with a conclusion with a wise application of ______.
Logic
It is a science that deals with numbers and operations. It helps economists answer concrete problems involving numbers. To arrive at a conclusion, __________ equations and operations are used. Among the social sciences, the most quantifiable discipline is economics.
Mathematics
It is a branch of mathematics that engages with the analysis and interpretation of numerical data. The method of gathering, tabulating, and analyzing data leads to the validity of specific hypotheses. Someone may be able to accept or dismiss (reject) an assumption made on a particular phenomenon.
Statistics
are the resources or inputs used to produce the goods and services that people want.
Economic or Production Resources
What are the different Production Resources?
Land
Labor
Capital
Entrepreneurship
Foreign Exchange
_________ is categorized as fixed resources – finite, exhaustible, and depletable. It is all that nature freely provides. Rent serves as payment to landowners.
Land
___________ is the exerted effort of individuals when producing goods and services. It covers a wide variety of abilities, characteristics, and skills.
Salary or wage is given to an individual in exchange for this.
Labor
labor is also known as _________________. It reflects the human capital to turn raw or national resources into consumer products.
human resources
It comprises all able-bodied people capable of working in the nation’s economy and offering other individuals or businesses different services.
Human capital
It is the man-made goods (resources) used when producing other goods and services.
It is a form of an asset used mainly as a medium of exchange. Interest is the income that the owner of the capital is earning.
it signifies the monetary resources businesses use to buy natural resources, land, and other capital goods.
Capital
_____________ move a nation’s economy as people purchase and sell resources to people and businesses.
Monetary resources
It is part of the person or economy’s income, not spent on consumption.
Savings
Is an economic activity that might earn the entrepreneur a profit or incur a loss.
Having skills in management is necessary to develop, run, and expand the business.
Entrepreneurship
An ____________ is an individual that organizes, manages, and assumes business risks, develops a new product or idea, and turns it into a successful business.
Entrepreneurship
is the dollar and the dollar reserves that the economy has. We use foreign currency, mainly dollars, for international trade and the procurement of raw materials from other nations.
Foreign Exchange
What is Scarcity?
Scarcity is a condition facing all societies because insufficient productive resources satisfy people’s unlimited wants
It is a condition where there are insufficient resources to satisfy a population’s needs and wants.
is the value of the best-foregone alternative or what is given up when one chooses
Opportunity cost
What does NO FREE LUNCH means?
In economics, decision-making involves trade-offs and suggests that there are no real free offers in society.
For instance, the person giving the gift pays for goods and services presented as a gift (free) to individuals. Even if there is no one to shoulder the direct costs, society, as in the case of adverse environmental impacts such as pollution, assumes the responsibility.
Differentiate Positive Economics and Normative Economics.
Positive Economics is an economic analysis that considers economic conditions ‘as they are’ or considers economics ‘as it is’
Normative Economics is an economic analysis that judges economic conditions ‘as these should be’. It also focuses on policymaking to achieve the ideal situation
is an assumption used in analyzing the relationship between two variables as the other factors are unchanged.
Ceteris Paribus Assumption
It’s Greek term meaning all other things held constant or all else equal
Ceteris Paribus
Ceteris Paribus, a Greek term meaning ________________________________
all other things held constant or all else equal
Explain Economics as an Applied Science
Applied Economics is the study of economics relative to real-life situations by observing how theories work in practice. It typically deals with numbers that are focused and backed by potential results being reviewed
What is Applied Economics?
Applied Science deals with applying scientific knowledge to problems to develop practical solutions.
It is the application of economic theory and econometrics in specific settings to analyze potential outcomes..
It deals with applying scientific knowledge to problems to develop practical solutions
Applied Science
It is the study of economics relative to real-life situations by observing how theories work in practice. It typically deals with numbers that are focused and backed by potential results being reviewed
Applied Economics
It is the application of economic theory and econometrics in specific settings to analyze potential outcomes.
Applied Economics
It simplifies economic reality used to make predictions about the real world
Economic Theory
It is the application of statistical and mathematical theories to economics for testing hypotheses and future forecasting trends
Econometrics
WHAT ARE THE APPLICATION OF APPLIED ECONOMICS?
1.It is a tool that allows the full picture of the current position to determine what to do and where to go.
2.It serves as a mechanism to decide what steps to enhance the economic situation could logically be pursued.
3.It can also prevent a negative situation from repeating, or at least mitigating the impact.
What is Economic System?
is the set of mechanisms and institutions that resolve questions of what, how, and for whom. It is how society responds to basic economic questions.
It is the set of mechanisms and institutions that resolve questions of what, how, and for whom. It is how society responds to basic economic questions.
Economic System
The standards used in differentiating between economic systems:
a.The owner/s of the resources
b.The process used in decision-making in the allocation of goods and resources
c.The types of incentives directing the economic decision-makers
What are the different economic systems? Explain each.
- Pure Market Economy - is an economic system in which private firms account for all production.
- Pure Command Economy - is an economic system in which all resources are government-owned, and the central plans of the government direct all production.
- Mixed Economy - is an economic system that mixes central planning with competitive markets. It is a mix of a rather free economy, such as a market combined with a planned economy, and avoiding the issues with capitalism and socialist economies.
- Transitional Economy - is an economic system in the process of shifting from central planning to competitive markets.
- Traditional Economy - is an economic system shaped largely by custom or religion. Decisions are based on traditions and practices that have been preserved and transferred from generation to generation over the years.
what is Market Economy?
Market Economy describes an economic system where markets play a relatively significant role.
It Is also known as the free market economy.
It is the most democratic form of an economic system.
It describes an economic system where markets play a relatively significant role. It Is also known as the free market economy. It is the most democratic form of an economic system.
Market Economy
What are the two (2) types of Pure Command Economy? Explain each.
Command Economy - is the authoritative system wherein decision-making is centralized in the government or a planning committee.
Planned Economy - is primarily government-controlled, with the government deciding what is produced, its quantity, and its price.
What are the basic economic questions to solve the issue of scarcity?
1.What to produce and How Much?
2.How to Produce?
3.For Whom to Produce?
4.Are the country’s resources being utilized, or are some lying idle and unemployed?
5.Is the capacity of the economy to produce goods growing or just remaining the same over time?
Philippine’s Economic Problems:
- Poverty Level
- Employment, Unemployment, and Underemployment
- Population Growth
How do we use economics as applied science to deal with some of a country’s economic issues or problems?
Given the extensive viewpoints on applying economic theories to the real world, there are several ways to address such a question. For example, when it comes to decision-making that will assist policymakers in stepping in the precise path, sound data analyses and economic problem assessment must first be carried out. Economists are more confident in their evaluations of the economic effects of policy decisions when they can analyze specific data and apply economic theories. These assessments turn out to be a form of applied activities or answers to a circumstance, creating solutions for the problems.
