Unit 1 Flashcards
the first modern economist
ADAM SMITH
Adam Smith defined Economics as?
“an inquiry into the nature and causes of the wealth of nations.”
Oikos means
household
Nomos means
management
Eventually, it was called _____ which means household management
oikonomos
Economics is a social science concerned with the ______, ______, and _______ of goods and services.
production, distribution, and consumption
It studies how individuals, businesses, governments, and nations make choices about how to allocate resources.
Economics
He defines economics the study of how men and society choose with or without the use of money, to employ the scarce productive resources which have alternative uses, to produce various commodities over time and distribute them for consumption now and in future among various people and groups of society.
PROF. PAUL A. SAMUELSON
According to him, economics, is a science that deals with the management of scarce resources to achieve the maximum satisfaction of human wants.
BAUTISTA (2010)
IMPORTANCES OF ECONOMICS
The Society
Informed Individual
Global Affairs
To understand the society economics seeks to analyze transactions made by the society and its members, particularly concerning on their behavior and decision making.
- The Society
Understanding of economics develops individuals to be wise voters. With this in mind, voters have an informed choice in selecting leaders based on their economic, social, and political platform and not just based on their appearances or popularity.
- Informed Individual
Economics seeks to explain the internal operation and trade policies of different countries.
- Global Affairs
- Focuses on how individual consumers and firms make decisions; these individual decision-making units can be a single person, a household, a business/organization, or a government agency.
Microeconomics`
- Microeconomics tries to explain ___ and ___ different goods are valued differently, how individuals make financial decisions, and how individuals best trade, coordinate, and cooperate with one another.
how and why
- Studies an overall economy on both a national and international level, using highly aggregated economic data and variables to model the economy
Macroeconomics
Macroeconomics focuses include a distinct geographical region, a country, a continent, or even the whole world. Its primary areas of study are _______ and ______ and ____
recurrent economic cycles and broad economic growth and development.
METHODOLOGY OF ECONOMICS
Positive Economics
Normative Economics
- An economic analysis that considers economic conditions “as they are” or considers economics “as it is.”
Positive Economics
It uses objective or scientific explanations in analyzing the different transactions in the economy.
Positive Economics
- An economic analysis that judges’ economic conditions “as it should be”.
Normative Economics
It deals with the formulation of policies to regulate economic activities and ethics and personal value that is concerned with human welfare.
Normative Economics
THE SCIENTIFIC METHODS OF ECONOMICS
Data Gathering
Economic Analysis
Economic Conclusion
Economic knowledge is mostly obtained from observation of economic events.
- Data Gathering
_________ is obtained through historical records and events interviews of past performances which are organized in a way that can be easily.
Data
Data gathered is useless if not analyzed.
- Economic Analysis
After laying down all assumption, one proceeds to reasoning in order to generate conclusion. Reasoning can either be verbal or with the statistics.
- Economic Conclusion
THREE BASIC ECONOMIC PROBLEMS
- What to Produce?
- How to Produce?
- For whom to produce?
- The question is answerable by knowing the trend of the demand for goods and services of the people.
- What to Produce?
- The people of the society must determine who will do the production, with what amount of goods and services, and what production techniques they will use.
- How to Produce?
- The answer to this question is simple; we produce for the people or the target market.
- For whom to produce?
o Capital Intensive
o Labor Intensive
How to Produce?
explain
FACTORS OF PRODUCTION
- Land
- Labor
- Capital
- Entrepreneur
a. This broadly refers to all natural resources given by nature. These are all the things and powers that are given free to humankind by nature.
- Land
in Economics, compensation for the use of land is called
Rent.
a. Any form of human effort exerted in the production of goods and services. This includes the skills, abilities, and characteristics of laborers.
- Labor
b. Profession payment for labor is called
Wage/Salary.
a. Refers to the human-made goods used in the production of other goods and services.
- Capital
b. The payment for the use of capital (money) is called
Investment or Interest.
a. The person who organizes, manages, and plans. The entrepreneur possesses managerial skills needed in building, operating, and expanding a business.
- Entrepreneur
b. The compensation or reward the entrepreneur received is called
Profit.
refers to the alternating phases of economic growth and decline. Since the phases are recurring, they often occur in an identifiable pattern where one phase usually follows the other
BUSINESS CYCLE
Business cycles are also called
Trade Cycles or Economic Cycles.
