Lesson 1 Flashcards
is a social science that deals with the efficient allocation of scarce resources to satisfy the unlimited human wants and needs
Economics
To address this fact, economists and non economists are eventually guided by five basic economic questions, namely:
- What to produce?
- How many and how much to produce?
- How to produce?
- For whom to produce?
- At what price to produce?
is a question of the types of goods society desires. Will a country produce rice, coconuts, bananas? Since resources are scarce, no economy can produce every product desired by members of society?
What to Produce?
A question that refers to the quantity of each good that will have to compose the total output. Example, if rice is decided to be produced, how much should the total output be?
How many or how much to produce
is a question on the technique of production and the manner of combining resources to come up with the desired output.
How to produce
a question refers to the market to which the producers will sell their products. It refers to how much of the wants of each consumer are to be satisfied.
For whom to produce
Answering the final question entails determining how much the consumers are willing pay for a product and if the price is agreeable on the part of the producer.
At what price to produce?
The first activity is known as the
Production activity
This directly addresses the basic economic questions of what to produce, how many and how much to produce, and how to produce.
Production activity
Primary and necessary items needed for man to survive.
Basic goods
Items that are desired by man to have a more comfortable way of life, but are not necessary to his survival, often expensive and not easy to acquire.
Luxury Goods
Items that are desired by man to have a more comfortable way of life, but are not necessary to his survival, often expensive and not easy to acquire.
Luxury Goods
Goods that are provided by the government for the benefit of its constituents
Public Goods
Goods that are normally abundant and do not need to be paid for.
Free goods
Goods that are normally produced or are scarce, requiring a certain payment for their consumption
Economic goods
Production can be classified into two:
Labor-intensive production and capital-intensive production
production requires more of the human skills
Labor-Intensive Production
requires more of the machineries and other resources to produce goods and services.
Capital-Intensive Production
The second economic activity is known as
Distribution
It directly addresses the question, “For whom to produce?”. It focuses on how the products will reach the ultimate consumer. Non-conventional way of transporting such as kalesa, pushcarts and the likes are still the cheapest but slowest way. The conventional way which includes air cargo, ships and the like is more expensive but is much faster.
Distribution
the third economic activity which is designed to facilitate the transfer of goods or service from the producer to the consumer.
Exchange
The final (4) economic activity is
Consumption
where the ultimate consumer now gets to enjoy the goods or services he or she has bought. The satisfaction derived from ___________ of a good or service is generally called utility. Normally, the higher the utility of a good, the higher the satisfaction a consumer gets.
Consumption
Generally, there are at least four basic factors used in any production process, regardless of the types of production facility an enterprise has, This is so-called,
CELL
CAPITAL-Interest
ENTREPRENEURSHIP -Profits
LAND RENT NATURAL RESOURCES-Rent
LABOR-Salaries and wages
TYPE OF RESOURCE OF CAPITAL
Man-made Resources
TYPE OF RESOURCE OF ENTREPRENEURSHIP
Human Resource
TYPE OF RESOURCE OF LAND RENT NATURAL RESOURCE
Natural Resource
TYPE OF RESOURCE OF LABOR
Human Resource
The principal functions of economics fall into two categories:
POSITIVE AND NORMATIVE ECONOMIC
is supposed to be completely objective, limited to the cause-and-effect relationships of economic activity; it is therefore concerned with the way economic relationships are. It is factual and is used to describe occurrence of a phenomenon.
Positive economic
is concerned with what ought to be or what should be. This is more subjective and more judgemental. In contrast, ___________ is more predictive than descriptive in usage.
Normative economic
is a schedule of prices and quantities that a supplier or suppliers would be willing to offer for sale at each price per period of time
supply
refers to a state where there is a balance of internal forces and no tendency
for the situation to change unless outside forces intervene.
Equilibrium
To simplify, ______________ is a state where
quantity demand equals quantity supply.A system in such ————— may also be termed _________
-Equilibrium
-static
Mathematically, the law of supply can be expressed as:
Qs=500P
in a country which deals with the production, distribution, exchange and consumption of goods and services.
Economic system
is composed of people, institutions, and their relationships. It is designed primarily to address the problems of economies in a country, particularly, the allocation of scarce resources.
Economic system
Economic systems may be classified into three types:
Traditional economic system
Command Economics
Market Economic System
-In this economic system, production decisions are made according to customs and traditions. A farmer engaged in the production of rice does exactly what his father did 20 years ago. This system, while simple and easy, does not follow for progress to be introduced in the production techniques. This is usually practiced in underdeveloped regions and in mountains where transportation and communication are practically nonexistent.
Traditional economic system
- In this economic system, the basic economic problems are dictated by the government through the head of the nation or a group of men designated by the head to make decisions. The former Soviet Union and Cuba are very good examples of this economic system.
Command economic
is one which a nation’s economic decisions are result of individual decisions by buyers and sellers in the market. The buyers represent the demand side of the market, while the sellers represent the supply side of the market. Transactions in this market occur when both buyers and sellers agree on the price of a given good or service. Although there is governmental intervention, it usually plays more of a regulatory rather than an intervening role.
market economic system
An extreme type of this economy is known as ________ , which only happened in Italy during the time of Benito Mussolini where people were encourage to accumulate more wealth and consume larger number of product and services apparently to bring about great economic wealth to the country.
Fascism
