MIDTERMS Flashcards
a discipline in the field of social science that deals with the allocation of scarce resources among competing and insatiable human wants
Economics
It studies how people and society make choices to employ scarce resources
Economics
Allocation of scarce resources to the production of goods and services through technology to satisfy human wants
Economics
applied field which is concerned with
the production, distribution, and consumption of various forest goods and services.
Forest economics
It focuses on sustainable management of both marketable and non-marketable forest goods and services
Forest economics
What are the 3 foundations of economics?
Human wants, resources, techniques of production
What is the driving force of an economic system?
Human wants
What is the end goal of economics?
Satisfaction or fulfillment of human wants
A foundation of economics that recur and sometimes evolve.
Human wants
In microeconomics, human wants are measured by ________ and in macroeconomics it is measured by __________
Utility, capita per income
A resource that uses mind and muscle to produce goods and services
Labor
A resource that refers to all non-human resources that can contribute toward placing the goods in the hands of the ultimate consumer
Capital
A resources fabricated by men like car
Artificial resource
GOD endowed resources like air that is not man-made.
Natural resources
A resource that can be regenerated or perpetuated, although there is an issue in this definition since there are resources like forests which can be renewable in the long run but not in the short run production
Renewable
A resource that cannot be perpetuated or regenerated, like
minerals.
Non-renewable
resources that are not consumed despite constant use like sunlight.
Perpetual resource
a resource that is not of present use but may be of use in the future like garbage
Potential resource
resource whose use is free of charge although in some cases tapping it has cost, like water
Free resource
Give me the characteristics of a resource
Scarce
Versatile
Can be combined to produce goods
It is the goal of resource use and occurs when an input is maximized to outputs. ex. timber to plywood, fiberboard, and fuelwood
Efficiency of production
it sets the limit on production and thus the level
of want satisfaction in an economy.
Techniques of production and technology
It refers to the state of the arts that are
available for transforming resources into satisfying forms.
Techniques of production and technology
What are the ways to limit the production of goods?
Economic growth
Use of existing resources wisely
REDUCE WANTS
What is the best way for the Philippines to limit the production of goods?
Use of existing resources wisely
since we don’t have the technology.
It is renewable in the short run
period, if not properly managed, the time will come when these resources can also become non-renewable, just like our extinct endemic birds and
plants.
Forest resource
How to utilize resources wisely?
Ensure efficient and equitable distribution of goods and services
This considers the individual economic units such as the consumer and producer
Microeconomics
This type of economics focuses on larger units, like a country or a region, thus the National Income Theory, Per Capita Income, Gross National Product, and the like
Macroeconomics
the economics of a country or the economy as a whole that
may include the forces causing the recession, depression, and inflation together with the resulting economic growth
Macroeconomics
the economics of the individual parts or the interacting sub-units of the economic system, such as individual consumers and groups of consumers, resource owners, firms, industries, individual government agencies and the like
Microeconomics
the amount of money that has to be paid in order to acquire the resource
Price
What is the goal of forest economics?
Economic growth, reduced scarcity and maximized satisfaction from forest goods and services;
What is the general function of an economic system?
What to produce
How to produce
For whom
How to allocate them in time and space
What is the goal of the seller and buyer in an imperfect competition market?
Influence the price of the product
What usually exists in a freely competitive market?
Seller’s market
a market structure where there is only one buyer of a product and many sellers hence, it is the buyer who dictates the price.
Monopsony
a market structure where it has few buyers and many sellers of a product.
Oligopsony
A market structure that has one seller of a product that has no good substitute.
Monopoly
A market structure where there are few
sellers of either homogenous or differentiated goods. The fewness in the number of firms that produce the commodity allows each seller to have
limited influence over the price of the commodity
Oligopoly
A market structure wherein the product is somewhat differentiated so that the product’s demand depends on the degree of differentiation which can be real or imaginary in the minds of the consumers. (branding)
Monopolistic competition
A market structure that has (i) many buyers and sellers, (ii) homogeneity of the products, (iii) absence of artificial restraints or legal restrictions which allow only the market forces to determine the price level and (iv) mobility of goods and services
Pure Competition
market structure that is characterized by the features of pure competition
plus the (v) perfect knowledge of the market.
Perfect Competition
What is a Bilateral monopoly?
Single seller to a single buyer
an economic theory that states that the price of a good or service is based on the relationship between its supply and demand.
Price Theory
that point at which the total supply of a particular good or service being offered by firm/s can be reasonably consumed by potential consumer/s
Equilibrium Price
the various quantities of goods and services that consumers are willing to take in the market at various alternative prices all other things constant
Demand
The demand of a particular individual consumer or household is known as __
Individual/ household demand
What is the summation of all demand for that particular product?
Market demand
State the law of demand
The lower the price of a commodity the larger the quantity demanded
What is the graph of the demand curve?
Downward sloping right
contains the price per unit of the commodity side by side with the quantity which the consumer will take given all the possible prices of the commodity
Demand schedule
that point in Y where X is
equals to zero
a or Y Intercept
This equation is sometimes used to predict the acceptable price for the
commodity if we know how much each consumer is willing to take from the
market.
Demand Equation
It is characterized by being downward sloping to the right and convex to the origin.
Demand curve
What are the 7 factors affecting demand?
Dx - Demand for commodity X/unit time
Px - Price of commodity X/ unit time
T - Taste and Preferences of Consumers
R - Range of Products to Choose From
Py - Price of Related Goods like Price of Y/ unit time
C - No. of Consumers
I - Income of Consumers and
E - Expectation of Future Prices
These include fad, cultures, age, denominations, professions, educational background, traditions and the like which when disturbed or suddenly altered also influence the demand for a given commodity on a particular time and location
TASTE AND PREFERENCE
A greater number of choices means more substitutes, hence lower demand for each commodity under choice
Range of Products to choose from
a commodity that is consumed together with another commodity
Complementary good
a commodity say A that can replace the use of another commodity like B without necessarily reducing the degree of satisfaction that should have been derived from consuming B.
Substitute good
Two classification of goods based on Consumers’ Income
Inferior good
Superior good
a type of commodity where if income increases, there is a decrease in consumption.
Inferior good
a type of commodity where if there is an increase in income consumption increases. narra compared to gmelina
Superior good
Each commodity has a natural pattern of consumption in a year or product
cycle.
Expectation of future prices
the measure of the degree of
responsiveness of quantity demanded to a change in price.
Demand elasticity/ price elasticity
Factors affecting price elasticity
Availability of substitute goods
Number of uses of the commodity
Price of goods
Time period of concern
Price elasticity use absolute value, hence sign is ignored.
TRUE
If elasticity (E) is greater than 1,
it is elastic
If elasticity (E) is less than 1,
it is inelastic
If elasticity (E) is equivalent to 1,
it is unitary elastic
If elasticity (E) is equivalent to 0,
it is perfectly inelastic
If elasticity (E) is equivalent to (infinite),
it is perfectly elastic
What is the importance of elasticity measurement?
Analyzes the potential effect of a price change to a particular commodity
A commodity that is more responsive to a change in price (elastic or non-essential good) has an _______
Unstable market
the measure of the degree of responsiveness of quantity demanded to a change in income.
Income elasticity
the measure of the degree of responsiveness of quantity demanded to a change in price of another good, say X and Y. This type of elasticity establishes the relationship between two commodities.
Cross elasticity
What is the law of supply?
as price increases, quantity supplied also increases, and as price decreases quantity supplied decreases
the various quantities of goods and services that sellers are willing to place in the market at various alternative prices all other things constant.
Supply
What is the direction of the supply curve?
Upward sloping to the right
What are the factors affecting supply?
Price of inputs and raw materials
Capital
Technology
Import and export
Subsidy
Tax
The greater the amount of capital, the
greater is the production.
TRUE
Import ________ the supply of Commodity in the market forcing the price to go down, on the contrary export reduces the supply of commodity in the market.
Increases
_______ and _____ are examples of government policies utilized to influence
the price of commodity in the market.
Tax and subsidy
An improvement of ________ means greater efficiency in production. More
commodity can be produced given the same amount of input.
Technology
the equilibrium price and quantity are freely established by the interaction between __________
demand and supply
a situation, caused by a price being set in the market above the equilibrium level.
Surplus
The difference between quantity supplied (QS) and quantity consumed
(QD) is the surplus
Surplus
a situation, caused by a price being set below the equilibrium level, in which case, the buyers want to buy larger quantities than sellers want to sell.
Shortage
A market gives the sellers and the buyers a fair influence over the price of a commodity.
Pure competition market
Ceteris paribus
All other things being equal
The fixed cost per unit of product at various levels of output.
Average Fixed Cost
The overall costs per unit of output.
Average Cost
shows the various quantities of goods or services that the consumer
will take at all possible income levels, other things being equal
Engel Curve
the costs of resources hired or purchased by a firm to be used in its production process.
Explicit Cost of Production
the costs of the fixed resources used by a firm in the short run.
Fixed cost
the costs of self-owned, self-employed resources used by a firm in its production process.
Implicit Cost of Production
shows the combinations of resources required by a firm to produce a given level of product output. It is similar to an indifference curve which slopes downward to the right for resources that can be substituted for one another
Isoquant curve
the change in total costs resulting from a one-unit change in output.
Marginal Cost
the amount of one resource that a firm is just able to give up in return for an additional unit of another resource with no loss in output.
Marginal Rate of Technical Substitution
the change in the total output of a firm
resulting from a one-unit change in the employment level of the resource, holding the quantities of the other resources constant.
Marginal Physical Product of a Resource
the technical physical relationship between the quantities of a firm’s resource inputs and the quantities of its output of goods or services per unit of time.
Production function
shows the alternative combinations of goods that can be produced
Production Possibility Frontier
states that if the input of one resource is increased by equal increments per unit of time while the quantities of other inputs are held constant there will be some point beyond which the Marginal Physical Product (MPP) of the variable resource will decrease
The Law of Diminishing Returns
the costs per unit of time of all its fixed resources.
Total Fixed Cost
the alternative costs, or total obligations that a firm incurs for
its variable resources.
Total Variable Cost
the summation of Total Fixed Cost and Total Variable Cost
Total Cost
the flow of cash payments to or by an organization.
Cash flow
the process of calculating the future value of money at a given interest rate.
Vn = Vo (1+ I)n
Compounding
the interest of the first period is added automatically to the principal and
the interest of the following period is also added on the new principal, and so on thus the interest each year amounts to more than that of the preceding year. (Applied in forestry)
Compounding interest
a technique or an economic tool which attempts to evaluate a
project in terms of all relevant costs and benefits associated with such project, including social cost and benefits
Cost-benefit analysis
If the project benefits are greater than project cost, then the project is _________________
economically feasible/profitable.
the allocation of the value of fixed asset investments to the period of their
usefulness.
Depreciation
the process of converting the future value of money to present value with the given interest rate.
Discounting
the rate at which production cost are deflated to a value at the present time
Discount rate
any part of the firm’s business concerned with a particular product or group of similar product
Enterprise
the negotiated price at which the owner of stumpage sells his timber or
other forest crops.
Stumpage price
refers to standing timber (or other forest crops) which have some economic and market values.
Stumpage
the residual value after deducting the cost of converting timber into its
intended products plus the margin for profits and risks from the established selling price of the said end product.
Stumpage value
a process of raising prices, giving rise to reduction in the purchasing power of
money
Inflation
the average rate earned on all costs made prior to the time of timber
harvest
Internal rate of return
the added output that comes with one extra input.
Marginal output
the value after deducting the cost of production plus a margin for profit and
risks from the estimated selling price
Residual cost
appraises the present value of forest property, including standing mature
timber, young growing crops and soil, either in the form of single stand or a large tract with a diversity of ages, kinds of timber and conditions of forest cove
Forest valuation
three ways to identify the best option for production
Total production function
Least-cost option
Benefit-cost analysis
This is the highest point in the TP Curve
Silvicultural rotation - maximum production point
Give three differences between consumers and producers.
The consumer purchases goods to GENERATE SATISFACTION while the producer purchases to produce GOODS
The consumer is constrained by INCOME and PRICE OF GOODS while the producer is constrained by TOTAL COST OUTLAY and PRICES OF RESOURCES
Stage in a production function is characterized by an increase in the average product of labor as more labor per unit capital is used.
STAGE 1
In stage 1, the increase means that the technical efficiency of labor or product per worker is ______
Rising
In stage 2, as labor continues to increase the technical efficiency of labor _______
decreases
Stage in a production function is characterized by decreasing average product and shrinking marginal physical product of labor.
STAGE 2
Stage in a production function wherein the application of larger quantities of labor to a unit of capital further reduces the average product of labor.
STAGE 3
In stage 3, the efficiency of both labor and capital __________ when the firm pushes to stage 3 condition
decreases
What is the ultimate use of the production function?
Determining when to harvest
Another term for the point of inflection
the point of the highest growth rate
Another term for the point in tangency
The peak of the average product or most efficient rate
