ECO111 Basic Economics with Land Reform Taxation PDF

ECO111 Reviewer/Basic Economics with Land Reform Taxation ECONOMICS - is a Social Science that deals with the Proper how they are produced, and how they distributed are Allocation of Scarce Resources to Satisfy Unlimited Wants determined by competition and consumer demand. and Needs....

ECO111 Reviewer/Basic Economics with Land Reform Taxation ECONOMICS - is a Social Science that deals with the Proper how they are produced, and how they distributed are Allocation of Scarce Resources to Satisfy Unlimited Wants determined by competition and consumer demand. and Needs. FORMS of CAPITALISM WALSTAD AND BINGHAM define economics as a “Social 1. All economic decisions are made without government Science concerned with using scarce resources to obtain the intervention. maximum satisfaction of the unlimited material wants of 2. Competition serves to determine the goods and services society” needed by society 3. Competition will determine who will survive in the SAMUELSON AND NORDHAUS define economics as a “The marketplace. Under the modified capitalism, the study of how societies use scarce resources to produce government intervenes and regulates business to a certain valuable commodities and distribute them among different extent. people” 4 Rights of capitalism COLLIN define economics as a “The study of production, 1. Private Property - people have the right to own property, distribution, and use of goods and services” and their heirs have the right of inheritance. These rights motivate individuals to work and save money to buy Wants – created needs of men property. Needs – basic needs of men that need to satisfy 2. Profits - people have the right to earn profits and dispose them as they wish. SCARCE RESOURCES & UNLIMITED WANTS - They 3. Business decisions – people have the right to engage in represent two opposing realities. Resources are just not business and determine how their business will operate. enough to satisfy people since wants are unlimited and 4. Choice - people have the freedom to choose what resources are limited. occupation to undertake, where to establish their residences, what products and services to buy, etc. SCARCITY -Condition wherein most things that people want are available only in limited supply. These things are 2. COMMUNISM - Communism is “a society in the called economic goods. government owns all the nation’s resources”. It is the -the imbalance between our desires and the means of economic system that is directly the opposite of capitalism. satisfying those desires. The rights of capitalism which are private property, profits, business decisions are not allowed under communism. The ECONOMIC GOOD - Is anything either a physical decision on what goods and services to produce, how they commodity or a service, which yields utility and which will be produced, and how they will be distributed are could command a price if brought or sold in the market. determined by central government planning. People have no choice of jobs as this is dictated by the government. It is OPPURTUNITY COST - the cost of choosing to use the government which decides who will be farmers and resources for one purpose measured by the sacrifice of the who will be soldiers, and only the government can own and next best alternative for using those resources. operate businesses. FOUR FUNDAMENTAL ECONOMIC CHOICES 3. SOCIALISM - Under Socialism, the government owns and 1. WHAT TO PRODUCE- it refers to what is being operates the basic industries like telecommunication, water demanded, wanted and needed by the target market; the service, postal service, transport, and selected economic society must discover the desires of the people it manufacturing businesses. The government determines serves. what goods and services to produce, how to produce, and 2. HOW MUCH TO PRODUCE - it refers to the size of the how they are distributed. Those not produced by the target market; the system must also determine how much government are provided by private individuals depending of goods should be produced; this will depend on how much on consumer demand and resource availability. people want-their tastes and desires. 3. HOW TO PRODUCE- it refers to the manner of producing 4. MIXED ECONOMIES - A mixed economy is one that has the goods/services; capital intensive or labor intensive; elements from more than one economic system. It contains 4. FOR WHOM TO PRODUCE- it refers to the both private and state enterprises. As no country practiced characteristics or attributes of the target market; youth, communism, socialism or capitalism in pure form, mixed senior citizens, teachers, lawyers etc. economies became a reality. The practice is actually an attempt to make use of the best features of an economic 4 Types of economic systems(Capitalism, Communism, system and “mix” these with that of another system. This Socialism, Mixed Economies) came about as a result of the failure of an adapted system to produce the required results. 1. CAPITALISM - is an economic system mainly characterized by private individuals owning and operating the majority of businesses that produce goods and services. The decisions on what goods and services are produced, Padayon, mga Ekonomista ng Bayan! 1 ECO111 Reviewer/Basic Economics with Land Reform Taxation FACTORS OF PRODUCTION LAW OF DEMAND AND SUPPLY 1. LAND -includes land used for agricultural or industrial purposes as well as natural resources. Income earned by MARKET - A market is a means of interaction between providing land is RENT buyers and sellers for trading or exchange. The consumer buys and the seller sell. The most common type of market is 2. LABOR- refers to that basic factor of production which the goods market. It may be a wet market like in the quinta are productive services embodied in human physical effort, market where people buy pork, chicken or fish. It may also skill, intellectual powers and others. Income earned by consist providing labor is WAGE/SALARY of a dry market wherein, people buy shoes or clothes. - exertion of human efforts - Wage = service (blue collar job) type of work that involves There is also a labor market where workers offer their manual labor services and employees look for workers to hire. Stock Salary = employee (white collar job) type of work that market where commodities traded consist of securities of typically involves professional, administrations, etc. corporations. 3. CAPITAL - refers to durable goods produced in order to DEMAND - The demand for a product is the quantity of a produce other goods. It consists of buildings, plant, good that buyers are willing to buy. A demand schedule machineries, road, computers, etc. Income earned by shows the different quantities that will be bought of a good, providing capital is INTEREST given various prices. This demand schedule may reflect an - It refers to man-made goods to produce other goods. individual schedule of a consumer, or a market schedule of a group of consumers. 4. ENTREPRENEURSHIP - man’s ability to organize land, labor, capital. Income earned is PROFIT A DEMAND FUNCTION shows how the quantity demanded - responsible for making and using resources of a good is dependent on its determinants, the most important of which is the price of the goods itself. The ECONOMIC GOALS demand curve is the graphical presentation of the demand schedule. 1. Economic Growth- what is desired by society is a higher standard of living which is translated into the production of Real Income – refers to the buyers’ purchasing power more and better-quality goods and services. obtained from his money income. It represents the amount 2. Full Employment – there must be jobs for those who are of goods and services he can buy. willing and able to work. 3. Economic Efficiency - this is a goal that requires using Non-Price Determinants of Demand resources to derive the maximum benefit for society. 1. No. of population (Po) 4. Price level Stability - the economy should be able to avoid 2. Consumers Income (CY) great fluctuations in the general level of prices. 3. Expected Future Price (EFP) 5. Economic Freedom - a high degree of freedom to choose 4. Taste/Preference (TP) what economic activity to undertake should be afforded the 5. Advertisement/Promotion (A/P) various sectors consisting of executives, workers, and consumers. SUPPLY - The supply of a product is the quantity of 6. An Equitable Distribution of Income- the economy must goods that sellers are willing to sell. The not be made up of a certain group that is so poor and supply schedule shows the different destitute while other groups wallow in great luxury. quantities that will be offered for sale at 7. Economic Security - there should be enough provision for various prices. This supply schedule may those who are not able to earn minimal income like the reflect an individual schedule of only one aged, the chronically ill, the disabled, etc. producer, or the market schedule showing 8. Balance of trade - a balance of trade that is reasonable the aggregate supply of a group of sellers or must be maintained. producers. DIVISION OF ECONOMICS Non-Price Determinants of Supply 1. No. of Sellers (NS) 1. MICROECONOMICS - concerned with “the behavior and 2. Level of Technology (LT) activities of specific economic units - individuals, 3. Producers Motive (PM) households, firms, industries, and resource owners” 4. Cost of Production (CP) 5. Availability of Raw Materials (ARM) 2. MACROECONOMICS - is the division of economics that deals with “the behavior of the economy as a whole with respect to output, income, the price level, foreign trade, unemployment, and other aggregate economic variables”. It views all consumers as a unit- consumer sector, all businesses as aggregate unit, business sector, and all various government agencies as a unit. Padayon, mga Ekonomista ng Bayan! 2