Chapter 1 - Intro to Econ PDF

INTRODUCTION TO ECONOMICS KAYE ANGELICA DE SAGUN  Learning Objectives After the completion of the chapter, the students will be able to: 1. Identify different activities involved with economics. 2. Discuss the price and economic theory; 3. Relate the price and economic theory to...

INTRODUCTION TO ECONOMICS KAYE ANGELICA DE SAGUN  Learning Objectives After the completion of the chapter, the students will be able to: 1. Identify different activities involved with economics. 2. Discuss the price and economic theory; 3. Relate the price and economic theory to relevant and current situations. 4. Justify the fundamental economic problems HOW DO YOU DEFINE; ECONOMICS NEEDS AND WANTS SCARCITY CHOICES THE FOUNDATION OF ECONOMICS ADAM SMITH “FATHER OF ECONOMICS” defined Economics as “AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS”  WHAT IS ECONOMICS? Economics is the study of what constitutes rational human behavior in the endeavor to fulfill needs and wants. A social science that studies how individuals, businesses, governments, and societies allocate scarce resources to satisfy their needs through the production, consumption, and distribution of goods and services. Economics asks what goods are produced, how these goods are produced, and whom they are produced.  SCARCITY It is the main economic problem scarcity refers to limitations–limited goods or services, limited time, or limited abilities to achieve the desired ends. It means that the demand for a good or service is greater than the availability of the good or service. It refers to the issue of having limited resources that are required to meet unlimited human wants and needs  WHY MAKE CHOICES? Because all goods, resources, and services are limited. We make choices about how we spend our money, time, and energy so we can fulfill our needs and wants. TRADE-OFFS are decisions involve picking one thing over all the other possibilities. WHAT ARE NEEDS AND WANTS?..... WHAT ARE NEEDS AND WANTS? NEEDS - stuff we must have to survive. ex. food, clothing and shelter WANTS - stuff we would really like to have. ex. fancy food, big screen tv, jewelry, bags. TYPES OF ECONOMICS ?  TYPES OF ECONOMICS MICROECONOMICS is the study of individuals and business decisions. is the field of economics that looks at the economic behaviors of individuals, households, and companies. MACROECONOMICS is the study that looks at the decisions of countries and governments. takes a wider view and looks at the economies on a much larger scale—regional, national, continental, or even global  ECONOMIC ACTIVITIES It is related to production, distribution, exchange and consumption of goods and services. The primary aim of the economic activity is the production of goods and services with a view to make them available to consumer.  ECONOMIC ACTIVITIES Human activities which are performed in exchange for money Economic activities are those efforts which are under taken by man to earn income, money, wealth for his life and to secure maximum satisfaction of wants with limited scarce means. ex. A worker works in a company to get wages.  CLASSIFICATION OF ECONOMIC ACTIVITIES In terms of national economy, a basic classification of economic sectors, broken into four basic sectors is used: 1. Primary sector (Raw materials) 2. Secondary Sector (Manufacturing and Industry) 3. Tertiary Sector (Service Sector) 4. Quaternary Sector (Knowledge Sector) 5. Quinary Sector (Decision Making Sector)  PRIMARY SECTOR It refers to that sector of economy that use natural resource to produce goods. Agriculture and allied activities like mining, fishery, forestry, dairy, and poultry are included in this sector.  SECONDARY SECTOR Also known as manufacturing sector or industrial sector. An economic activity which people use raw material to produce or manufacture new products of greater value. The sector which transforms one physical good into another  TERTIARY SECTOR It is the service sector of the economy This sector provides services to the general population and to businesses. Ex. distribution, transportation, entertainment, restaurants, healthcare, law  QUATERNARY SECTOR It is the way to describe the knowledge based part of the economy which typically includes services such as information technology, information generation and sharing, media and research and development.  QUINARY SECTOR Includes the highest levels of decision making in a society or economy This sector would include the top executives or officials in such fields as government, science, universities, non-profit, culture , healthcare and media. QUESTION.... What is the importance of economics in our daily life? PRICE THEORY AND ECONOMIC THEORY PRICE THEORY The theory of price is a theory which states that the price for goods and services is determined by economic forces such as supply and demand. According to this theory, the relationship between supply and demand influences price as to whether the prices of goods and services will rise or decline. PRICE THEORY AND ECONOMIC THEORY ECONOMIC THEORY An economic theory is a set of ideas and principles that outline how different economies function. Depending on their particular role, an economist may employ theories for different purposes. For instance, some theories aim to describe particular economic phenomena, such as inflation or supply and demand, and why they occur.  BASIC ECONOMIC PROBLEMS What to produce? How to produce? How much to produce? For whom to produce?  Thank you very much!