Applied Economics PDF

APPLIED ECONOMICS By Darlene T. Alag  What is ECONOMICS ?  DEFINITION OF ECONOMICS 01 is the social science that involves the use of scarce resources to satisfy unlimited wants.  DEFINITION OF ECONOMICS 02 is the scien...

APPLIED ECONOMICS By Darlene T. Alag  What is ECONOMICS ?  DEFINITION OF ECONOMICS 01 is the social science that involves the use of scarce resources to satisfy unlimited wants.  DEFINITION OF ECONOMICS 02 is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses  SCARCITY is a condition where there are insufficient resources to satisfy all the needs and wants of a population. Choice & Decision-Making Opportunity Cost - refers to the value of the best foregone alternative.  ECONOMIC RESOURCES (FACTORS OF PRODUCTION) 01 LAND 03 CAPITAL 02 LABOR 04 ENTREPRENEURSHIP LAND - soil & natural resources that are found in nature and are not man-made LAbOR physical & human effort exerted in production CAPITAL man-made resources used in the production of good & services, which include machineries & equipment  EURSHIP TREPREN EN organizing the other factors of production & risk-taking Main Branches of Economics 01 02 MICROECONOMICS MACROECONOMICS  MICROECONOMICS is concerned with the behavior of individual entities such as the consumer, the producer, and the resource owner. studies the decisions and choices of the individual units and how these decisions affect the prices of goods in the market.  MACROECONOMICS is concerned with the overall performance of the entire economy. focuses on the overall flow of goods and resources and studies the causes of change in the aggregate flow of money, the aggregate movement of goods and services, and the general employment of resources. MeTHODOLOGIES OF ECONOMICS 01 02 NORMATIVE POSITIVE ECONOMICS ECONOMICS NORMATIVE ECONOMICS WHAT OUGHT TO BE -focuses on policy formulation that will help to attain the ideal situation POSITIVE ECONOMICS WHAT IS -an overview of what is happening in the economy that is possibly far from what is ideal.  ECONOMIC SYSTEM refers to a set of economic institutions that dominate a given economy with the main objective of solving economic problems.  4 CATEGORIES OF ECONOMIC SYSTEM: 01 TRADITIONAL ECONOMY -it is a system whose past experiences, which were handed from generation to generation, are used as bases for economic decisions.  4 CATEGORIES OF ECONOMIC SYSTEM: 02 COMMAND ECONOMY -the decisions are made from the top authority and whatever decisions made are relayed to the majority of the people.  4 CATEGORIES OF ECONOMIC SYSTEM: 03 FREE MARKET ECONOMY -refers to an individual consumer and businesses interact to solve the economic problems.  4 CATEGORIES OF ECONOMIC SYSTEM: 04 MIXED MARKET ECONOMY -both private and public institutions exercise economic control.  BASIC ECONOMIC PROBLEMS OF SOCIETY WHAT TO PRODUCE HOW TO PRODUCE? & HOW MUCH? FOR WHOM TO PRODUCE?