Applied Economics Second Quarter Quiz

Applied Economics - Second Quarter Reviewer

• Methods of Analyzing Economic Data:

  • Theories and Models in Economics:

    • Economic Theories: Simplified versions of economic phenomena and relationships between economic variables.
    • Economic Models: Representations of empirically tested economic and social phenomena, with specific assumptions.

  • Ways of Stating Economic Analysis:

    • Positive statements: Describe what is, often used in qualitative and quantitative approaches. (e.g., "Gross domestic product measures the productivity of a nation.")
    • Normative statements: Express opinions or judgments about what ought to be, involving value judgments on phenomena or policies. (e.g., "The government should increase taxes on sugar to decrease mortalities due to diabetes.")

  • Tools in Illustrating Economic Phenomena:

    • Economic Variables: Elements or data in a study that can change.
    • Functions: Relationship between variables (e.g., D = f(p): Demand is a function of price).
    • Economic Equations: Mathematical expressions of an economic concept (e.g., Y = C + I).
    • Graphs: Visual representations of the relationship between two or more variables.

Socio-economic Conditions of the Contemporary Philippines

• Macroeconomic Statistics: Data related to the Philippine economy.
  • Gross Domestic Product (GDP): A measure of the total value of goods and services produced within a country's borders in a given period of time.
  • GDP components: Consumption (C), Investment (I), Government Spending (G), and Net Exports (NX).
  • Other Economic Indicators: Year-on-Year Growth Rates of GDP, Q1 2021 to Q1 2024
  • Major industries: Agriculture, forestry, and fishing; Industry; Services
  • Major expenditure Items: Household Final Consumption Expenditure, Government Final Consumption Expenditure, Gross Capital Formation, Exports of Goods and Services.

Market Structures

• What is a Market Structure?: An organization's operating environment. Consideration of factors like entry difficulty and the number of vendors indicates industry competitiveness.
• Degrees of Competition: Categories of market structures based on the number of firms, bargaining power of consumers and suppliers, and barriers to entry.
• Market Structures:
  • Perfect Competition: Theoretical structure with no monopolies. Consumer influence on price is high.
  • Monopoly: Single seller or producer with no substitutes.
  • Monopolistic Competition: Many firms offering similar yet not identical products or services.
  • Oligopoly: Market with a small number of producers, with significant influence on others.

Price Elasticities of Demand & Supply

• Price Elasticity: Measurement of responsiveness in demand or supply to a price change.
  • Point Elasticity: Measures elasticity at a specific point on a curve.
  • Arc Elasticity: Measures elasticity over a range of prices.
  • Elasticity Values: Coefficient values define different degrees of elasticity (e.g., Elastic, Inelastic, Unit Elastic). Relate to changes in quantity demanded or supplied based on price changes.

Price Elasticity of Demand and Total Revenue

• Price Elasticity of Demand (PED): Measures the responsiveness of quantity demanded to price changes.
• Total Revenue Test: A way to understand the relationship between price and total revenue based on elasticity values.
• Elastic Demand: Price increases reduce total revenue; price decreases increase total revenue.
• Inelastic Demand: Price increases increase total revenue, price decreases reduce total revenue.
• Unit Elastic Demand: Total revenue remains unaffected or changed by small quantities by price increases.

Income and Cross Elasticity of Demand

• Income Elasticity of Demand: Measures the responsiveness of quantity demanded to changes in consumer income.
• Positive: Increase in income leads to an increase and demand.
• Negative: Increase in income leads to a decrease in demand.
• Cross Elasticity of Demand: Measures the responsiveness of quantity demanded of one good to price changes in another good.

Determinants of Price Elasticity of Demand and Supply

• Factors that affect elasticity: They include availability of substitutes, time period, proportion of income spent, and necessarity of the good.

Measuring Economic Growth and other Concepts

• Gross Domestic Product (GDP): Total value of final goods and services in a country.
• Gross National Product (GNP): Total value of final goods and services produced by a country's residents, regardless of location.
• Gross National Income (GNI): Measure of total income of a country.
• Simple Formulas: Relationships among different factors to calculate GDP.
• GDP Calculation Approaches. There are different methods to calculate GDP, such as expenditure, income, and production approaches.
• Other Indicators: Sample Problems concerning employment statistics.

Types of Inflation and Inequality

• Inflation: The rising general price level that reduces purchasing power of money.
• Headline Inflation and Core Inflation: These are different measures of inflation focusing on different sets of goods and services, and are usually calculated using a “basket” of goods and services.
• Demand-pull Inflation and Cost-Push Inflation:These are factors that cause inflation.
• Measurement of Income Inequality: Economists use the Lorenz curve and Gini coefficient to understand income distribution.

Additional Notes and Macroeconomic policies

• Additional Notes on market concepts with sample questions and answers.
• Macroeconomic policies on trade (tariffs, quotas).
• Macroeconomic Monetary Policies and fiscal policies.

Test your understanding of key concepts in applied economics, including theories, models, and methods of analyzing economic data. This quiz covers both positive and normative statements and the tools used to illustrate economic phenomena.