BASIC
ECONOMICS
ETEEAP.3rd Cluster
Course Intended Learning Outcomes
• Specifically, the course intends that at the end of the course, the
students will be able to:
• Understand the relevance of the subject in their field of study; and
• Get involve in the economic discussions and debate over issues of
politics and implementation of economic reforms
• Contribute towards nation building and improvement of the
standard of living
• Embrace the idea that the economies of countries are interrelated
and that this could be a tool to make connections between the
economic principles they learn and the now-global world they live
in.
Economics
is a social science which deals with the study of
the production, distribution/allocation of scarce
resources for the satisfaction of human needs
and wants.
Social sciences related with the
study of economics:
1. Economic Geography – is the branch of geography
that deals with the relations of physical and economic
conditions to the production and distribution of
commodities. The economic development of a society
always depends on geographical factors such as size of
area, location, population, and natural resources.
2. History – The economics interpretation of History
involves the theory that in the last analyses economic
factors including, especially the level of technology
attained by a particular society and the economic
relations into which men enter on the basis of that
technology exert a decisive influence on the course of
political, social, and intellectual evolution.
3. Geology - Economic Geology is the branch of
Geology that deals with the geological materials of
economic utility. (examples are petroleum
geology, mining geology, etc.) Economist may use
geological data in studying mineral reserves and
other economic resources found underneath
Philippine territory.
4. Politics - Political Economy studies the economic
conditions that affect the organization,
development, and activities of the State and their
implications that may, modify, or even prescribe
new economic policies of government.
5. Sociology & Anthropology – Through
Sociology & Anthropology, economist could study
the economic development of Third World and
may formulate theories about the types of social
organization that contribute to economic progress.
Through Social Psychology, business firms may
effectively study consumer behavior to guide them
in the production process.
6. Philosophy –Economist are guided by
philosophical, logical (use of reasoning, or rules of
logic and fallacies) and ethical (ethics or morality)
principles when they formulate their methods of
organizing an economic society.
7. Mathematics - For analytical purposes,
geometry (use of three-dimensional graphs,
charts, lines, etc.) may be applied to indicate
where an individual may start his study of
economic phenomena and problems.
Algebraic symbols or variables can also be used
to formulate his assumptions explicitly and
lead him to precise and correct results.
8. Statistics – Statistics enables a person to
make use of historical and comparative data to
help him understand the complexities of a
given economic condition. It helps build
theories by testing if hypotheses are based on a
day-to-day significance. Lastly, statistics
quantifies given relationships postulated by
equations to strengthen theoretical
explanations that can be used for prediction for
decision making.
9. Psychology – the human side of economics is
approached through psychology because
individuals’ instincts characterize their economic
activity. People patronize goods and acquire
wealth to buy goods that satisfy their wants.
Producers of goods apply psychological
approaches, such as market surveys and
advertisements to induce consumers buy their
products.
10. Natural / Physical Sciences – The exploitation
of natural resources depends upon human (needs
such as the utilization of agricultural, forest and
mineral land, and water resources.
11. Home Economics - or the theory or practice
of homemaking refers to the field of study and
research forming part of an academic
curriculum of formal subjects and practical
skills (e.g. nutrition, child care, clothing, home
furnishing and decoration, household account,
family and community relationships) necessary
for good home management and family life.
TYPES OF RESOURCES
1. Land Resources
2. Water Resources
3. Human Resources
TYPES OF ECONOMIC SYSTEMS
Sound economic practices depend largely on the
availability of resources; the economic provisions of
the nation’s constitution; local laws and ordinances;
and the customs and traditions of society. Economic
development of a society depends also on the type of
economic system it had adapted. For specific
reasons four types of economic systems are generally
mentioned , by economists, namely:
1. the traditional economic system
2. market economic system
3. the command economic system, and
4. the mixed economic system
ECONOMIC RESOURCES / FACTORS OF
PRODUCTION
The primary objective of any economic system is
to produce the required output of goods and
services through the utilization of the following
resources:
1. Land
2. Labor
3. Capital
4. Entrepreneurship
ECONOMIC GOALS
Every economy in a society has set objectives for
its people. The ultimate goal of every economic
system is the attainment of economic
development. Economic development refers to
the transformation of natural resources (the
nations own or those imported from other
nations as raw materials) into evermore
processed goods; the improvement of services in
order to enhance the material well-being of
nation’s people.
The 1987 Constitutional Provision on National
Economic Development Section 1, Art 12 declares:
• The goals of the national economy are: more
equitable distribution of opportunities, income,
and wealth; a sustained increase in the amount
of goods and services produced by the nation for
the benefit of the people; expanding productivity
as the key to raising the quality of life for all,
especially the underprivileged.
• The state shall promote industrialization and full
employment based on sound agricultural
development and agrarian reform; through
industries that make full and efficient use of
human and natural resources and which are
competitive in both domestic and foreign
markets. However, the State shall protect
Filipino enterprises against unfair competition
and trade practices.
• In the pursuit of these goals, all sectors of the
economy and all regions of the country shall be
given optimum opportunity to develop. Private
enterprises, cooperatives, and similar collective
organizations, shall be encourage to broaden the
base of their ownership
To sum it up, the intent and purposes of the
constitutional provision on national economy is for the
promotion and attainment of the following:
1. Better quality of life - The people must enjoy a
higher standard of living through the
production of more and better quality goods
and services.
2. Gainful employment - the problems of
unemployment and underemployment must
be addressed.
3. Economic efficiency - utilizing resources for
production to satisfy the unlimited wants of the
society.
4. Price level stability - The economy should be
able to avoid lack of supply of economic goods
and inflation.
5. Economic freedom - the rights of both
employers and workers must always be
respected and safeguarded.
6. An equitable distribution of opportunity,
income and wealth - The economy must not be
dictated or controlled by the few or elite
groups, the poor, the powerless and the
have-nots must participate in its growth.
7. Economic security - Every Filipino family
must be above the poverty line; that there must
be always food in their tables; proper formal
education of their children, decent shelter,
clothing on their backs, etc.
THE FUNDAMENTAL ECONOMIC PROBLEMS
1. WHAT
2. HOW
3. HOW MUCH
4. FOR WHOM
ACTIVITY:
1. What are your passions in life? What interest
you the most? What hobbies or activities do you
want to engage in? What business can you start
based on your interests?
2. What skills and competencies are you good at?
Can these be developed into an entrepreneurial
venture?
3. Apply the basic economic problems to
questions 1 & 2
Economic System
• Traditional Economic System
• Command Economic System
• Market System
• Mixed Economic System
Demand and Supply
A market consist of demand and supply—buyers & sellers.
• Demand – refers to the amount of a product that
people willing and able to purchase at a specific
price.
• Factors affecting demand:
• - income
• - tastes and preferences
• - prices of related goods and services
• - expectations
• - number of buyers
• - climate
Supply – the amount of goods & services that
producers are willing and able to offer for sales at
each possible price during a period of time,
everything else held constant.
• Factors Affecting Supply:
• - Prices of Resources
• - Technology and Productivity
• - Expectations of Suppliers
• - Number of Suppliers
• - Prices of related goods or services
• - Climate
Economic Growth
Economic growth is an increase in the production
of goods and services in an economy. Increases in
capital goods, labor force, technology, and human
capital
ECONOMIC GROWTH
• What do you mean by economic growth?
Basically, economic growth is an increase in real GDP. As
more goods and services are produced, the real GDP
increases and people are able to consume more.
• But if the population is growing in an even higher rate,
output per person can actually fall.
• If we define economic growth as rising per capita real
GDP, then growth requires a nation’s output of goods
and services to increase faster than its population.
Determinants of Growth
• Labor – economic growth depends on the size and quality of the
labor force. The size of the labor force is a function of the size of the
working-age population.
• Capital- labor is combined by capital to produce goods and services.
• Workers need machines, tools, and factories in order to work
• Land – land surface, forests, minerals, and other natural resources
are land.
• Technology – ways of combining resources to produce goods and
services.
Globalization
Discuss:
The Meaning of Globalization
The Role of Technological Change to
Economic Development
Unemployment & Inflation
• Definition of unemployment
• Types of Unemployment
• Costs of Unemployment
MARKET STRUCTURES
• Be able to define:
1. Monopoly
2. Oligopoly
3. Competition
Land Reform Program of the Phils
TAXATION
• What is taxation
• What are the different kinds of taxation
• How are taxes being collected in the
Phils.
• Uses of taxation
ACTIVITIES
CHAPTER I. EXERCISE – A
NAME : _________________________
PROF : _________________________
GUIDE QUESTIONS:
1. Why is scarcity the root problem of economics?
2. Why is economics an important social science
discipline? By citing 3 instances use the science of
economics in your daily life.
3. What are the goals of our national economy
provided for by the 1987 Philippine Constitution?
4. Make your own definition or explanation of what
Economics is.
EXERCISE–B
Fill in the blanks:
TABLE 1
DEMAND SCHEDULE FOR A NOKIA
CELLPHONE
Price per Unit in Quantity Demanded in
Pesos units
Php 5,000.00 10,000
6,000.00 9,000
8,000.00 7,000
10,000.00 5,000
Graphical Representation:
Figure 1. Demand Curve for Nokia Cellphone
Price (P)
Quantity Demanded (Qd)
Example:
Table 2.
Hypothetical Market Supply Schedule of Pork Per
Week
Price Quantity Supplied
(per kilo) ( in kilos)
Php 45 180
40 150
35 120
30 90
25 60
20 30
Figure 2
QS
THANK YOU
Prof. Julieta M. Rodelas, MBA
