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Introduction To Microeconomics With LRT Lesson 1

This document provides an introduction to microeconomics and macroeconomics. It defines economics as dealing with how societies allocate scarce resources to satisfy unlimited wants. Microeconomics focuses on individual markets and prices, while macroeconomics looks at the overall economy including factors like GDP, unemployment, and monetary policy. The document also outlines different economic sectors (household, business, government, international), economic activities (production, exchange, consumption, distribution), and the fundamental economic problem of what, how much, and for whom to produce.
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0% found this document useful (0 votes)
746 views6 pages

Introduction To Microeconomics With LRT Lesson 1

This document provides an introduction to microeconomics and macroeconomics. It defines economics as dealing with how societies allocate scarce resources to satisfy unlimited wants. Microeconomics focuses on individual markets and prices, while macroeconomics looks at the overall economy including factors like GDP, unemployment, and monetary policy. The document also outlines different economic sectors (household, business, government, international), economic activities (production, exchange, consumption, distribution), and the fundamental economic problem of what, how much, and for whom to produce.
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Principles of Economics by: Roberto Medina Prepared by : Bernard Cua

INTRODUCTION TO MICROECONOMIC !IT" #RT Etymolo$y of Economics %rom t&e 'ree( )ord *oi(onomia+ or * oi(onomos+ )&ic& means mana$ement od &ouse&old : Oi(os , &ouse- . nomos , mana$infEconomics is a science t&at dals )it& t&e allocation of scarce resources to satisfy t&E unlimited needs and )ants of t&e society/ Economics is a study of &o) societies use scarce resources to produce 0ariable commodities and t&en distribute t&em amon$ different people/ Economics is a social science t&at deals )it& t&e efficient allocation of scarce resources to satisfy man+s unlimited )ants and needs/ DI1I ION O% ECONOMIC 2/ Microeconomics 3 deals )it& t&e interaction of t&e economic a$ents suc& as firms4 industries4 indi0iduals4 $o0ernment a$encies and t&e li(e/ 5 Prices of $oods 5 1alue of land4 labor and capital 5 pecific mar(ets: food4 electronics4 ener$y 5 Businesses4 monopolies4 and commercail empires 5 Employees and employers 6/ Macroeconomics 3 deals )it& t&e economy as a )&ole/ It furt&er e7amines t&e factors t&at determine national product/ 5 Inflation and unemployment 5 'o0ernment income and e7penses 5 Total money supply4 in0estments 5 International %inance and economies 5 Balance of payments4 fiscal policy

Principles of Economics by: Roberto Medina Prepared by : Bernard Cua

Microeconomics and Macroeconomics contrasted MICROECONOMIC M8CROECONOMIC Concerns )it& &ouse&old income Deals )it& national income %ocuses on indi0idual product #oo(s o0er o0erall prices le0el prices and relati0e prices and &o) 9uic(ly it rises and fall/ Concerns )it& &o) many people Deals )it& a$$ra$ate are &ired )it&in a year employment for a $i0en year MET"OD OR U E O% ECONOMIC 2/ Positi0e economics 3 attempts to understand t&e be&a0ior and t&e operation of t&e economic system )it&out ma(in$ :ud$ements )&et&er t&e outcomes are $ood or bad/ It deals )it& facts and e7istin$ situations )it&in t&e economy/ 5 "o) muc& pay )ill be $i0en to s(illed or uns(illed )or(ers ; 5 "o) )ill ne) ta7es affect t&e spendin$ po)er of consumers; 5 In )&at )ays is in$apore a&ead of t&e P&ilippines in terms of forei$n in0estments; 6/ Normati0e economics 3 loo(s at t&e outcomes of t&e economic be$a0ior and as(s )&et&er t&ey are $ood or bad and )&et&er t&ey can be made better/ In ot&er )ords4 normati0e economics in0ol0es :ud$ement and prescription of courses of action/ It is about norms4 0alues4 :ud$ements4 and et&ical concerns re$ardin$ t&e economy and 0arious economic situations/ 5 &ould $o0ernment pro0ide subsidy or re$ulate t&e &i$& cost of education; 5 &ould consumers patroni<e products )&ic& are c&eaper but are of lo) 9uality or products )&ic& are more e7pensi0e but are of &i$&er 9uality; 5 !&at percenta$e of t&e bud$et s&ould families spend for t&eir food;

ECONOMIC ECTOR 8ND ECONOMIC

Principles of Economics by: Roberto Medina Prepared by : Bernard Cua

2/ INDI1IDU8# 3 refers to people )&o stru$$le daily )it& economic situations suc& as employment4 )a$es and )ise spendin$/ Economics affect eac& indiciduals dependin$ on t&eir 0alues4 culture4 or status in life/ 6/ "OU E"O#D 3 consists of t)o or more members4 families or $roups of families )&o cooperate for t&e purpose of li0in$/ "ouse&old can be classified by t&e le0el of income/ 5"ouse&old are income receivers meanin$ t&at t&ey $enerate income from combined )a$es4 salaries4 earnin$s of t&eir members/ 5"ouse&old can become spenders too because t&ey buy needs and necessities/ 5"ouse&old are sources of ta7es and sa0in$s 5"ouse&old can also pro0ide labor or entrepreneurial abilities =/ BU INE E 3 T&ey are t&e sector t&at pro0ides products or ser0ices to satisfy &uman needs and )ants/ It can be cate$ori<ed as sin$le proprietor4 partners&ips and corporation/ >/ 'O1ERNMENT 3 consists of leaders and prime mo0ers of a country4 )&ic& sets its political and economic policies 5promotes t&e effecti0e performance of mar(ets t&rou$& le$al frame)or(s and $round rules for t&e mar(et to follo): a/ rules of contract b/ penalties for 0iolators c/ incenti0es for business players 5 recei0er of funds and income t&rou$& ta7es and spends for $i0ernment pro:ects/ ?/ INTERN8TION8# ECTOR 5 refers to trade and business acti0ities t&at &appen bet)een and amon$ nations/ Production and consumption 0ary amon$ t&e different countries of t&e )orld/ 5 T&is sector &as no) become a (ey sector because of t&e increasiun$ trade relations and $lobali<ation/

Principles of Economics by: Roberto Medina Prepared by : Bernard Cua

5 T&e $ro)t& of international sector is spurred by t&e follo)in$ factors: a/ Tec&nolo$y 3 better met&ods of trasportin$ $oods4 people and ser0ices b/ Trade #iberali<ation 3 Openin$ of mar(ets to ot&er countries to$et&er )it& an accompanyin$ decrrease on tariffs or import ta7es/ c/ Trade a$reements amon$ countries and re$ions of t&e )orld c/2/ 8sia5Pacific Economic Conference ,8PECc/6/ European Union , European Community c/=/ Nort&ern 8merican %ree Trade 8$reement , N8%T8DI1I ION O% ECONOMIC 8CTI1ITIE 2/ PRODUCTION 5 refers to t&e creation of more utilities/ Production is an acti0ity t&at creates or ma(es t&in$s aimed to satisfy man+s satisfaction/ T&e basic resources needed for production are: a/ #and 3 includes eart&+s surface capable of culti0ation/ In t&is resource includes also e0ertyt&in$ t&at is pro0ided by nature suc& as air4 bodies of )ater/ b/ #abor5 refers to t&e e7ertion of effort to $et income/ It refers to t&e producti0e ser0ices embodied in &uman p&ysical effort 4 s(ill or intellectual po)ers/ It consists &uman time spent in production/ c/ Capital5 refers to durable $oods used to produce ot&er $oods/ It also includes buildin$s4 plants mac&ineries4 roads 4 computers4 s&ips and ot&ers/ d/ Entrepreneur or Enterpriser 3 t&e one t&at mana$es and efficiently utili<es #and4 #abor and Capital to produce $oods to satisfy &uman )ants/ 6/ E@C"8N'E 3 refers to t&e consideration of 0alue and price/ %or e0ery e7ca&n$e to ta(e place4 t&ere s&ould al)ays be $oods and ser0ices for )&ic& t&e amount )ill be $i0en/ =/ CON UMPTION 3 refers to t&e final utili<ation of $oods and ser0ices/

Principles of Economics by: Roberto Medina Prepared by : Bernard Cua

>/ DI TRIBUTION 3 refers to t&e apportionment of t&e national income amon$ t&e factors of production/ T&e different s&ares of distribution are: a/ Rent 3payment deri0ed and $i0en from t&e use of land b/ alary , or )a$es - 3 refers to t&e compensation recei0ed by an indi0idual in t&e e7ercise of function or ser0ices rendered/ c/ Interest5 refers to t&e income deri0ed from t&e capital in0estments d/ Profit 3 refers to t&e amount or income deri0ed from t&e entrepreneurs&ip en$a$ed in by an indi0idual and s&ared to t&e enterpriser for &is effort in mana$in$ t&e business/ T"E %UND8MENT8# ECONOMIC PROB#EM 2/ 6/ =/ >/ !"8T TO PRODUCE ; "O! MUC" TO PRODUCE; "O! TO PRODUCE; AAA %OR !"OM TO PRODUCE;

AAA #8! TO BE CON IDERED IN PRODUCTION a/ #a) of Diminis&in$ Returns 3 It concerns )it& t&e relations&ip of t&e 0ariable and fi7ed imputs/ It states t&at4 )it& t&e successi0e addition of 0ariable inputs to a fi7ed factor4 a time )ill come )&en t&e 0ariable input )ill fall to yield increasin$ returns/ %I@ED %8CTOR 2 &ectare of lo) land C rice UNIT O% %ERTI#IBER D 2 6 = ? G E OUTPUT , Ca0ansED FD 22? 2=D 2>D 2>? 2>E 6D. 6?. 2?. 2D5 ?5 65 PERCENT8'E O% R8TE INCRE8 E

Principles of Economics by: Roberto Medina Prepared by : Bernard Cua

b/ #a) of comparati0e ad0anta$e 3 T&is ma(es a comparison as to t&e benefits offered/ It $uides and $i0es insi$&t4 on t&e part of t&e producers4 to compare and decide )&ic& is more ad0anta$eous to do4 to buy or to produce/

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