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Francis Benson C. Hugo

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Course DescriptionThe objective of this course is to provide a basic

comprehension of the complexities of economics in theinternational, national, regional and household settings.

The subject covers the basic economic principles inefficiently analyzing ones own economic problems andfollow intelligently the economic issues of the day.

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Course MethodologyAssigned readings for each session shall be

supplemented by lectures. Both the readings andlectures shall in turn be amplified in the classdiscussions.

Specific questions and problem areas of students areexpected to be discussed during the open forum.

The burning economic issues of the week whetherrelated to the topic for the day or not shall likewise bediscussed towards the end of the class.

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Course Outline Session 1

Introduction to course, Administrative requirements, etc.

Sessions 2 to 5 Basic Economic Concepts: Defining Economics and its Nuances The Market Mechanism: Demand and Supply; and, Market

Equilibrium

Sessions 6 to 8 A Framework of How the Economy Works; Macroeconomic Instruments and Objectives; National Output, Unemployment and Inflation Aggregate Supply and Demand

Sessions 9 to 13 Monetary Policy Fiscal Policy

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Course Text and References Required Text:

Gordon, Sanford D. and Stafford, Allan D.,ApplyingEconomic Principles, Glencoe/McGraw-Hill, Westerville,

Ohio, 1994 Reference Text:

Billings, Henry F., Introduction to Economics, EMCPublishing, Minnesota, USA, 1991

Alternate Text Case, Karl E. and Fair, Ray C., Principles of Economics. 10th

Edition,Pearson Education, Inc., Jurong Singapore, 2012

McConnell, Flynn, Brue, Grant,Microeconomics, Mc-GrawHill, Inc., Philippines, 2012

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The Scope and Method of

Economics

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Why Study Economics To learn a way of thinking

To understand society

To understand global affairs To be an informed citizen

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To learn a way of thinking3 Fundamental Concepts1. Opportunity Cost Wants and Means

Productive resources (scarce)

Limits, Alternatives, and Choices

- the best alternative that we forgo, or give up, when we make achoice or a decision

Economics the study of how individuals andsocieties chooseto use the scarce resources thatnature and previous generations have provided.

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3 Fundamental Concepts3 Fundamental Concepts

1. Opportunity Cost

2. Marginalism (extra, additional)- The process of analyzing the additional or incremental costs or

benefits arising from a choice or decision- E.g., residence Pinagbuhatan

school Caniogan

visit relative RosarioOther ex.: Should you attend school for another year?Should you study an extra hour for an exam?Should you upsize your fries?Should you buy an android or IOS phone?Should a business expand or reduce its output?

Benefits: Increased Utility (Pleasure, Happiness, Satisfaction)1. Sunk costs costs that cannot be avoided because they have already

been incurred- E.g., Airplane with empty seats

marginal cost of extra passengerfew seats to be sold at big discounts

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3 Fundamental Conceptss 1. Opportunity Cost2. Marginal3. Efficient Markets

- A market in which profit opportunities are eliminated almostinstantaneously

- there is no free lunch

E.g.: hot tip in the stock market

- someone has to be first to get the news

- some people have quicker insights than others- news travels fast

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To understand society Past and present economic decisions

Current state of physical environment Buildings, roads

Character of society or level of material well-being 18th-19thcentury: Industrial revolution

Increased productivity of agriculture New manufacturing technologies More efficient forms of transportation

Late 90s: e revolution The way we:

buy and sell products, get news, plan vacations, communicate witheach other, teach and take classes, etc.

Nature and number of jobs- Facebook, YouTube, Yahoo!, Microsoft, Google, Monster.com,

Amazon.com

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To understand global affairs Indonesia, worlds top nickel producer from mines, started

a ban on unprocessed ore exports in January.

Affected Chinas nickel supply (used in stainless steel)

Opportunity for Philippines to increase raw ore shipmentsto China

Economic considerations affect international relations in arelatively open, market-oriented world.

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To be an informed citizen Government budget and support for PPP

New Centennial Water Source Kaliwa Dam Project

Implementing agency: MWSS

The NCWS Project aims to increase Metro Manilas raw water supply, (i) to meet future potablewater demand and (ii) as a redundant water source thereby reducing the dependence on theAngat Dam Reservoir. In the short and medium-run, the main purpose of the Project is to ensurewater security.

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To be an informed citizen Operation & Maintenance of LRT Line 2

Implementing Agency: DOTC

The LRT Line 2 Operation and Maintenance Project will infuse private sector

efficiencies into the operations of the LRT Line 2 to provide better service levelsto the riding public.

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To be an informed citizenWhy do the government fund for these instead of

other activities?

Is this a good idea?

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The scope of economicsMicroeconomics deals with the functioning of individual

industries and the behavior of individual economic decision-makingunits: firms and households

- output of single firm or industry- consumption patterns of a single or group of households

Macroeconomicsbranch of economics that economics that

examines the economic behavior of aggregates income, employment,output, and so on on a national scale

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Examples of Microeconomics and Macroeconomic Concerns

Division ofEconomics Production Prices Income Employment

Microeconomics Production/outputin individualindustries and

businessesHow much steelHow much officespaceHow many cars

Prices ofindividual goodsand services

Price of medicalcarePrice of gasolineFood pricesApartment rents

Distribution ofincome and wealthWages in the auto

industryMinimum wageExecutive salariesPoverty

Employment byindividualbusinesses and

industriesJobs in the steelindustryNumber ofemployees in afirmNumber ofaccountants

Macroeconomics Nationalproduction/outputTotal industrialoutputGross domesticproductGrowth of output

Aggregate pricelevelConsumer pricesProducer pricesRate of inflation

National incomeTotal wages andsalariesTotal corporateprofits

Employment andunemployment inthe economyTotal number ofjobsUnemploymentrate