Module 1Lesson 1

Basic Concepts of Economics

Pre-test

I. True or False: Carefully read each sentence and determine if the sentence is true or if the sentence is false.

1. Economics comes from the Greek word oikonomia which means household chores.

2. Economics is considered a field of social science.

3. Economics is relevant because it is part of everybody’s life.

4. There are three (3) divisions of Economics, the microeconomics, the macroeconomics and the home economics.

5. As a science, Economics is related to other sciences.

II. Essay. Answer the following using five (5) sentences and above.

a. As an individual, what do you think is the essence of studying economics?

b. How do you apply economics in your household?

In front of you are candies that you could get and eat. Come on,

everybody is invited to get candies. Do not be shy…

Analyses of the activity

What happened when you were invited to get candies? State your observation.

Definition of Economics

Using the words I have written on the board, how would you define Economics?

?

Economics as defined

ECONOMICS

From the Greek words Oikos meaning household and nomos meaning management

= household management

The wise production and use of wealth to meet the demands or needs of the people

Economics as defined by authors of Economics books Paul Samuelson (Economics)

“the study of how people and society end up choosing, with or without use of money, to employ scarce resources that could have alternative uses to produce various commodities among various persons and groups in society.”

Roger Le Roy Miller (Economics, Today and Tomorrow)

“Economics concerns situations in which choices must be made about how to use limited resources, when to use them and for what purposes. Resources can be defined as the things people use to make the commodities they want.”

Hall and Loeberman (Macroeconomics: Principles and Applications)

“The study of choice under the condition of scarcity”

Bernardo Villegas (Guide to Economics for Filipinos)

“A social science that studies and seeks to allocate scarce

human and non-human resources among alternatives in

order to satisfy unlimited human wants and desires.”

Gerardo Sicat (Economics)

“a scientific study which deals with how individuals and society make choices,”

Common words among definitions…

Scarcity- a situation wherein the amount of something available is insufficient to satisfy the desire for it.

Resources-The labor, capital, land and natural resources and entrepreneurship that are used to produce goods and services.

Unlimited – without limits, infinite

Wants –desires

Finally…

ECONOMICS – is a social science that deals with how people organize themselves in order to allocate scarce resources in order to produce goods and services that will satisfy the unlimited and multiplying wants and needs of man.

Concerns of Economics

Economics is concerned with PRODUCTIONProduction is the use of inputs to produce outputs.

Inputs are commodities or services that are used to produce goods and services.

Outputs are the different goods and services which come out of production process.

Society have to decide what outputs will be produced and in what quantity

Economics is concerned with DISTRIBUTION

Distribution is the allocation of the total product among members of society. It is related to the problem of for whom goods and services are to be produced.

Economics is concerned with CONSUMPTION

Consumption is the use of a good or service. Consumption is the ultimate end of economic activity. WHEN THERE IS NO CONSUMPTION, THERE WILL BE NO NEED FOR PRODUCTION AND DISTRIBUTION.

Economics deals with PUBLIC FINANCE

Public Finance is concerned with government expenditures and revenues. Economics studies how the government raises money through taxation and borrowing.

DIVISIONS OF ECONOMICS

ECONOMICS

MICROECONOMICS

Specific

Deals with the economic behavior of the individual units such as consumers,

firms, the owners of factors of productions

MACROECONOMICS

General, economy as a whole

Deals with the economic behavior of the whole economy or its aggregate

such as government, business, unemployment, inflation and the like.

Refers to management of income, expenditures, wealth or resources of a

nation.

Types of Economics

1. Household Economics – most common use of economics is for the family. At this level, anyone who knows the economic principles will be able to improve the running of the household.

2. Business Economics – when a person or group of persons begins to work, they come under the system of business economics in their workplace. In this type, you deal with the rent, salary, profits and others.

3. National Economics – Economic factors of problems affecting the whole nation. Deals with the management of income, expenditures, wealth or resources of a nation.

4. International Economics – The highest stage of economic activities involving the business of one country with other countries like trade, tourism, exchange rates.

Is Economics a science?

Explain why if “yes” or why not if “no”

?

Economics as a Science Is a science because it is an organized body of

truth, coordinated, arranged and systematized with reference to certain general laws and principles.(Observation, Formulation of theories, Gathering of data, Experimentation, Conclusion, Generalization)

Economic analysis seeks to explain economic events using some kind of logic based on a set of systematic relations.

It is a social science because the subject matter of economics is people or societies and their behavior, unpredictable in nature.

Relations of Economics to other Sciences

ECONOMICS

Essence of Studying Economics

To understand the world better Applying the tools of economics can help you understand global

and cataclysmic events such as wars, famines, epidemics, and depressions. Economics has the power to help us understand these phenomena because they result from the choices we make under the condition of scarcity.

To gain self-confidence and become wise decisions makersMastery of economics will help you to understand how things work in your society thereby “feeling equipped”

To achieve social change and contirbute to National Development

Economics can help us understand the origins of serious social problems such as: unemployment, hunger, poverty, disease, child abuse, drug addiction, violent crime. It will also explain why previous efforts to solve these problems have failed, and help us to design new, more effective solutions.

To help prepare for other careersEconomics has long been a popular college major for individuals who are intending to work in business. But it has also been popular among those planning careers in politics, international relations, law, medicines, engineering, etc. This is for good reason because practitioners in each of these fields often find themselves confronting economic issues.

Developments of Economics

Historical

ROWTOW’S 5 STAGAES OF ECONOMIC DEVELOPMENT

TRADITIONAL

PRECONDITION

TO TAKEOFF

DRIVE

TO

MATURITY

AGE OFHIGHMASS

CONSUMPTION

TAKEOFF

The Development of Philippine Economics

Pre-Hispanic

PNOY Gov’t

Fill in the economic development of the Philippines and the significant policies in each stage.