Economics Study on Adam Smith

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Questions and Answers

What does the equation $GDP = C + I + G + (X - M)$ represent?

Factors contributing to unemployment

Relationships among economic variables (correct)

Consumer behavior analysis

Monthly investment projections

What aspiration do Filipinos hold regarding their quality of life?

To rely solely on foreign investments for prosperity

To have a life that is precarious and uncertain

To achieve a life that is rooted, comfortable, and secure (correct)

To eliminate all forms of economic planning

What impact did the COVID-19 pandemic have on socio-economic achievements?

It rolled back some economic gains and exposed fragility (correct)

It led to increased consumer spending

It eliminated all unemployment in the country

It improved per capita income significantly

Which of the following is necessary for economic recovery as per the content provided?

A coherent Plan for Economic and Social Transformation Signup and view all the answers

What does the unemployment rate formula represent?

The proportion of unemployed individuals in the labor force Signup and view all the answers

What often governs rental costs through a contract between the lessor and lessee?

A contract that includes the option of renewal Signup and view all the answers

Which of the following factors can drive changes in rent?

Real estate prices and location Signup and view all the answers

What is one of the challenges facing Filipino entrepreneurs due to higher wages?

Lower profit margins Signup and view all the answers

What is the first financing option mentioned that an entrepreneur can consider?

Using one’s own funds Signup and view all the answers

What act was enacted by the Philippine Congress to establish a mechanism for minimum wage determination?

Wage Rationalization Act Signup and view all the answers

Which issue has significantly affected health care and education in the Philippines?

The scarring from the pandemic Signup and view all the answers

What can result from heavier foot traffic in a business area?

Higher rent but potentially more exposure Signup and view all the answers

What is required for an entrepreneur if the mandated minimum wage increases?

Adjustment of business costs Signup and view all the answers

What is the primary basis for imposing Percentage Tax according to the National Internal Revenue Code?

Being exempted from Value-Added Tax with gross annual sales not exceeding PhP 550,000 Signup and view all the answers

Which tax is classified as an indirect tax that may be shifted to the consumer?

Value-Added Tax Signup and view all the answers

What is a characteristic of the Law of Demand?

As price increases, demand decreases Signup and view all the answers

What range of percentage tax applies to specific industries and businesses?

3% to 15% Signup and view all the answers

Which of the following is NOT a component of demand?

Supply restriction Signup and view all the answers

What type of tax is the corporate income tax primarily classified as?

Direct tax Signup and view all the answers

What must be assessed when determining if an entity pays Percentage Tax?

Gross annual sales but not exceeding PhP 550,000 Signup and view all the answers

What are national taxes filed at the regional offices of the Bureau of Internal Revenue?

Personal income tax Signup and view all the answers

What is the primary problem that scarcity presents in economics?

Resources are finite and limited. Signup and view all the answers

Which factor of production is classified as a man-made resource?

Capital Signup and view all the answers

What is an opportunity cost?

The value of the next best alternative that is forgone. Signup and view all the answers

In the Circular Flow Model, which group provides labor and resources to the factor market?

Households Signup and view all the answers

What do laissez-faire policies advocate regarding government involvement in the economy?

Minimal government interference in business operations. Signup and view all the answers

Which of the following correctly describes the relationship between scarcity and economics?

Economics arises from the existence of scarcity. Signup and view all the answers

Which basic economic question addresses the issue of resource allocation?

How to produce? Signup and view all the answers

When choosing between walking and riding in a car to school, what type of economic concept is being demonstrated?

Opportunity cost Signup and view all the answers

What happens at the market equilibrium?

Quantity demanded is equal to quantity supplied. Signup and view all the answers

A price floor typically results in which of the following?

A surplus of goods. Signup and view all the answers

How do advancements in technology affect market forces?

They reduce the cost of production, increasing profitability. Signup and view all the answers

What role do substitutes play in demand?

They fulfill similar needs as another good. Signup and view all the answers

What happens when producers expect a surge in factor prices?

They increase production before higher input costs take effect. Signup and view all the answers

What is the effect of income on demand?

Increased income drives consumers to purchase more goods. Signup and view all the answers

In relation to other goods, how might manufacturers adjust their production?

They prioritize production as prices of certain products rise. Signup and view all the answers

What could be considered a government policy affecting the quantity supplied?

Subsidies provided to producers. Signup and view all the answers

Which of the following statements about complementary goods is accurate?

They are generally consumed together. Signup and view all the answers

What market condition results from a price ceiling?

A shortage of goods in the market. Signup and view all the answers

Study Notes

Adam Smith and Economic Principles

Advocated for laissez-faire policies, promoting minimal government intervention in the economy for business and societal benefit.
Increased production of one good requires a decrease in another due to limited resources.

Scarcity and Opportunity Cost

Scarcity arises from finite economic resources, defining the central problem of economics.
Factors of production include land (natural resources), labor (efforts and skills), capital (man-made resources), and entrepreneurship (management of production).
Opportunity cost refers to the value of the alternative forgone when a choice is made.

Circular Flow Model

Households supply labor and resources to the Factor Market in exchange for wages, while businesses utilize these resources to produce goods and services in the Product Market.
The cycle involves households purchasing goods and services, facilitating continuous economic activity.

Basic Economic Questions

Determines what and how much to produce and for whom.
Economic decisions impact lifestyle aspirations, reflecting the Filipino goal of comfort and security (matatag, maginhawa, at panatag).

Economic Data and GDP

GDP formula: GDP = Consumer Spending + Investment + Government Spending + (Exports - Imports).
Trends in poverty reduction and per capita income improvement can be disrupted by crises such as the COVID-19 pandemic.

National Governments and Public-Private Partnerships

The Mandanas-Garcia Ruling in 2018 significantly changed governance in the Philippines.
Increased private sector participation can effectively allocate public resources for human capital investment.

Challenges for Entrepreneurs

Investment and financing can come from personal funds or external sources, impacting operational stability and growth.
Minimum wage laws establish government-mandated pay levels which affect business expenses and profitability.

Taxation Insights

Income Tax: Paid at the municipal/city level for personal income or corporate entities depending on business structure and income.
Value-Added Tax (VAT): Indirect consumption tax applicable to the sale of goods/services in the Philippines.

Supply and Demand Dynamics

Law of Demand: Describes consumer behavior—quantity demanded (Qd) varies inversely with price (P).
Market Equilibrium occurs when quantity supplied (Qs) meets quantity demanded (Qd).

Market Forces and Movements

Factors influencing market forces include technological advancements, input prices, and price of related goods.
Producer expectations and government policies greatly affect supply decisions.

Determinants of Demand

Income changes can increase consumer purchasing power.
Substitutes satisfy similar needs, while complementary goods are typically consumed together.

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Description

Explore the fundamental principles of economics put forth by Adam Smith, including his views on production limits and laissez-faire policies. This quiz will delve into the impact of government involvement on business and societal well-being, highlighting the balance necessary in economic decisions.