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    The Economic Way of Thinking

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    Jouhara San Juan
    1) Economics is the study of how people use limited resources to satisfy unlimited wants and needs. It examines questions like what to produce, how to produce it, and who gets what is produced. 2) Microeconomics analyzes individual components like households and firms, while macroeconomics analyzes aggregates like overall output and unemployment. 3) Scarcity exists because resources are limited but wants are unlimited, forcing societies to make choices about production and distribution.

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    The Economic Way of Thinking

    Uploaded by

    Jouhara San Juan
    86 views18 pages
    1) Economics is the study of how people use limited resources to satisfy unlimited wants and needs. It examines questions like what to produce, how to produce it, and who gets what is produced. 2) Microeconomics analyzes individual components like households and firms, while macroeconomics analyzes aggregates like overall output and unemployment. 3) Scarcity exists because resources are limited but wants are unlimited, forcing societies to make choices about production and distribution.

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    Advanced Micro Economics

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    1) Economics is the study of how people use limited resources to satisfy unlimited wants and needs. It examines questions like what to produce, how to produce it, and who gets what is produced. 2) Microeconomics analyzes individual components like households and firms, while macroeconomics analyzes aggregates like overall output and unemployment. 3) Scarcity exists because resources are limited but wants are unlimited, forcing societies to make choices about production and distribution.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    86 views18 pages

    The Economic Way of Thinking

    Uploaded by

    Jouhara San Juan
    1) Economics is the study of how people use limited resources to satisfy unlimited wants and needs. It examines questions like what to produce, how to produce it, and who gets what is produced. 2) Microeconomics analyzes individual components like households and firms, while macroeconomics analyzes aggregates like overall output and unemployment. 3) Scarcity exists because resources are limited but wants are unlimited, forcing societies to make choices about production and distribution.

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    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 18

    The Economic Way of Thinking

    Chapter 1

    JOUHARA G. SAN JUAN DR. VIRGILIO V. SALENTES


    DBA Student Professor Lecturer

    NEXT
    KEY CONCEPTS
    • Economics
    — is a social science that deals with the
    production , distribution and
    consumption of goods and services.

    — is a study of how people use its limited


    resources to satisfy wants and needs.
    NEXT
    Branches of Economics
    Microeconomics Macroeconomics
    -analyses individual -analyses the economy as
    component of the a whole
    economy. -looks at aggregates.
    -examines small economic
    units , the components of Example: national output ,
    the economy. overall price level,
    aggregate unemployment
    Example: Individuals ,
    Households, Firms ,
    Industries
    NEXT
    Scarce Resources and Production

    Scarcity
    • is the economic
    problem of having
    seemingly
    unlimited human
    needs and wants, in a
    world of limited resources.

    Why does it exist?


    • It exists because wants
    are unlimited and
    resources are limited.
    NEXT
    The Problem of Scarcity :

    ==Three Basic Economic Questions==


    Question 1: What Will Be Produced?

    • Societies must decide on


    mix of goods to produce
    –depends on their natural
    resources
    NEXT
    Three Basic Economics Questions

    Question 2:
    How Will It Be Produced?
    • Production decisions involve using
    resources efficiently
    –Influenced natural resources

    • Societies adopt different approaches


    –labor-intensive methods versus capital-
    intensive methods depends on availability
    NEXT
    Continuation Question 2:
    How?
    * Goods and services are produced by using productive resources
    (inputs) that economist calls Factors of Production

    NEXT
    Three Basic Economics Questions

    Question 3:
    For Whom Will It Be Produced?

    • How goods and services are


    distributed involves two questions
    –how should each person’s share be
    determined?
    –how will goods and services be
    delivered to people?
    NEXT
    The Methodology Economic

    1. Scientific Method
    -theories are developed concretely because you
    cannot hold lab experiments . You study the economy
    itself as your lab.
    2. Generalizations
    -economic theories, principles and laws are
    generalization to economic behaviour.
    -Economic principles are expressed as the
    tendencies of average economic agents.

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    Continuation…
    The Methodology Economic

    3. Ceteris Paribus
    -all other things equal –to consider all
    issues , they assume all others stays the
    same.
    4. Rationality
    -assume people’s decision are rational.
    -people are motivated by incentive
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    Hazards of The Economic Way of Thinking

    There are two potential problems


    to be aware of:
    -The Ceteris Paribus Assumption
    -Possible Confusion of Association
    and Causation

    NEXT
    Why do Economist Disagree?
    -They may disagree about the validity of
    alternative positive theories about how world
    works.
    -They may have different values and therefore
    different normative views about what policy
    should try to accomplish.

    NEXT
    Economics: A social Science
    Positive VS Normative Economics

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    Economic Way of Thinking
    1. CHOICE: Self Interest or
    Social Interest ?
    You make choices that are in your
    self-interest—choices that you think are
    best for you.
    Choices that are best for society as a
    whole are said to be in the social interest.

    NEXT
    Cont.…The Economic Way of Thinking

    2. TRADE OFF
    -is alternative people give up
    when they make a choice
    –usually means giving up
    some, not all, of a thing to get
    more of another
    NEXT
    3. OPPORTUNITY COST
    -is value of next-best alternative a person
    gives up

    NEXT
    4. ANALYZING ECONOMIC CHOICES

    Cost-benefit analysis:
    • is a systematic approach to
    estimating the strengths and
    weaknesses of alternatives used to
    determine options which provide the
    best approach to
    achieving benefits while preserving
    savings.
    NEXT
    5. CHOOSING AT THE MARGIN
    Marginal Costs and Benefits

    • Marginal cost
    –additional cost of using one more unit
    of a good or service
    • Marginal benefit
    –additional benefit of using one more
    unit of a good or service
    –***Thank You and God Bless***
    NEXT

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