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5 Scrib Upload Course Introduction Nature and Scope of Economics

The document discusses key concepts in economics including opportunity cost, production possibility frontier, and different types of economic systems. Opportunity cost refers to the next best alternative given up when making a choice. The production possibility frontier illustrates the concept of tradeoffs graphically. The main economic systems discussed are traditional economies, command economies, market economies, and mixed economies.

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Neri Sangalang
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78 views12 pages

5 Scrib Upload Course Introduction Nature and Scope of Economics

The document discusses key concepts in economics including opportunity cost, production possibility frontier, and different types of economic systems. Opportunity cost refers to the next best alternative given up when making a choice. The production possibility frontier illustrates the concept of tradeoffs graphically. The main economic systems discussed are traditional economies, command economies, market economies, and mixed economies.

Uploaded by

Neri Sangalang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Nature and Scope of

Economics

By Engr. Ma. Nerissa P. Sangalang, RCE,LPT,MBA


Opportunity Cost or Trade-off
It is the computed value of the next best
alternative that is given-up when a choice is
made given a set of choices

Opportunity Cost is subjective to the value


one holds for the different options he/she
faces

09/03/2020 Microeconomics module by Engr. N. Sangalang 2


Economic Systems
• Is a system of production, resource allocation and
distribution of goods and services within a society or a
given geographic area
• Each economic system answers the four basic
economic questions

Types of Economics Systems


• Traditional Economy
• Common/Centrally Planned Economy
• Market Economy
• Mixed EconomyMicroeconomics module by Engr. N. Sangalang
09/03/2020 3
Production Possibility Frontier
(PPF)and Opportunity cost
The concept of trade off is illustrated in
economics by the PPF . It is a graph which
shows the greatest sum of output given the
accessible inputs.

09/03/2020 Microeconomics module by Engr. N. Sangalang 4


Table :
Trade off between Orange Soda
and Cola
Point Number of Hours Cola Orange Soda
A 1 0 40
B 2 20 30
C 3 25 25
D 4 35 10
E 5 40 0

09/03/2020 Microeconomics module by Engr. N. Sangalang 5


Table :
Trade off between Orange Soda
and Cola

09/03/2020 Microeconomics module by Engr. N. Sangalang 6


Traditional Economy
• One whose economic decisions are made
with great influence from the past
• Usually used to describe the system that
allows a peasant or tribal economy to
function
• Exchange is usually associated with ritual
obligations that observe customary laws
• Also called subsistence economy
• South America, Asia, Africa, Indians, Peru

09/03/2020 Microeconomics module by Engr. N. Sangalang 7


Command Economy
• Factors of production and distribution are
owned and managed by the state
• Have little or no political and economic
freedom
• There is no free competition among firms
• The products and needs of people are
distributed based on the priorities set by a
committee
• Also called centrally planned economy
• Former Soviet Union, Cuba, North Korea
09/03/2020 Microeconomics module by Engr. N. Sangalang 8
Market Economy
• “Market” as used in Economics refers to a
set of conditions that allows buyers and
sellers to freely interact to facilitate
exchange
• The price of the commodity dictates what
goods and services will be produced, how,
and for whom
• Relies within the majority: interaction occurs
between buyers and sellers in determining a
price of a particular good

09/03/2020 Microeconomics module by Engr. N. Sangalang 9


Market Economy
• The private sector owns and manages the
means of production
• There is no government influence in the
market

09/03/2020 Microeconomics module by Engr. N. Sangalang 10


Mixed Economy
• Both private (households and firms) and
public (government) institutions exercise
economic control
• Private sector exercises market mechanism
• Public sector exercises regulatory command
• The Philippines has a mixed economic
system

09/03/2020 Microeconomics module by Engr. N. Sangalang 11


END

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