What Is Economics? PDF

What is ECONOMICS? Group 1 De Pano, Leyva, & Manalang  Defining Opportunity Cost Recall the basic laws of supply and demand. Lesson Outline State the principle of comparative advantage. Explain why trade can be mutually beneficial for countries....

What is ECONOMICS? Group 1 De Pano, Leyva, & Manalang  Defining Opportunity Cost Recall the basic laws of supply and demand. Lesson Outline State the principle of comparative advantage. Explain why trade can be mutually beneficial for countries. Define marginal cost and marginal benefit and how marginal analysis is used in decision-making and how we can apply it in a scenario.  Use market-based solutions to correct negative externalities. Explain the trade-off between efficiency and Lesson equality. Outline List tools commonly used by economists (e.g., graphs) Explain the purpose of each tool in economic analysis. Use one of these tools to analyze an economic issue. DEFINING ECONOMICS Economics is often associated with wealth and finance, but it is not all about money. Economics is a social science. In basic terms, it is the study of people and their choices. It considers how things are made (produced), how things are moved around (distributed), and how things are used (consumed).  Opprtunity Cost Opportunity Cost: The value a person could have received but passed up in pursuit of another option.  3 books = 1 book = 1 notebook 2 notebooks Law of Demand when the price is high - less consumers when the price is low - more consumers & Law of Supply when supply is at ceiling price - supply is high when supply at floor price - supply is low Equilibrium  Price Control Price limits are frequently enforced on consumer staples. These are necessities, such as food, rent, gas, or power. The government's controls may impose minimums and maximums. Price caps are sometimes known as price ceilings, whereas price floors are used to describe the lowest costs. (Kenton, 2024) Comparative Advantage An economy's ability to produce a specific good or service for a lower opportunity cost than its trading competitors. Comparative advantage is used to explain why trade benefits corporations, countries, and individuals. (Hayes, 2024) Law of Comparative Advantage “each person should produce the good for which there is a lower opportunity cost than other producers” - Professor Dave Explains opportunity cost of opportunity cost of making 1 book is 1/3 making 1 notebook is of the notebook 1/2 of the book VP Sara can Sen. Risa can make 1 make 1 book notebook Trade is a win-win competition both parties must expect to gain something in a voluntary exchange Benefits of Global Trading Trade is the interchange of goods across international borders, It enables countries to extend their markets and obtain non-domestic products. Competition in international trade leads to more competitive pricing, which results in reduced prices. Products can be exported or imported, with imports going to domestic markets and exports going to international ones. (Meiners & Grimsley, n.d)  Importance of thinking at the margin In economics the term ‘margin’ always refers to anything extra. (Nipun, n.d.) “The marginal unit of any factor of production, of any stock of goods and of any output of goods, is one extra unit of the same.” marginal cost: It is the cost added by producing one additional unit of a product or service marginal analysis: it is a way for comparing an activity's added benefits against its additional expenses. How does marginal analysis helps entrepreneurs in decision-making?  How does marginal analysis helps entrepreneurs in decision-making? According to the article of Hayes (2024) in Investopedia, Marginal analysis is a decision-making strategy used by businesses to optimize prospective revenues by examining the cost or benefit of adding more units or personnel.  Externalities A cost or benefit of an economic activity experienced by an unrelated third party.  Negative Externality Positive Externality These occur when the activities of an These occur when the activities of an individual or organization impose costs individual or organization provide on others. benefits to others.  Externalities can lead to market failures because the costs or benefits are not reflected in the prices of goods and services. Economists and policymakers often seek ways to address externalities through regulations, taxes, subsidies, or other mechanisms to align private incentives with social well-being.  Equity-Efficiency Tradeoff refers to the balancing act between fairness and economic performance in policy-making or economic systems. Equity A fair distribution of resources and opportunities among individuals in society. Efficiency relates to how effectively resources are used to produce goods and services and maximize overall economic output. The trade-off arises because policies aimed at increasing equity might reduce economic efficiency, and vice versa. Balancing equity and efficiency requires careful consideration of how to achieve both fair outcomes and reliable economic performance. BASIC TOOLS OF ECONOMIC ANALYSIS TABLE A systematic arrangement of data in columns and rows. RELEVANCE OF TABLES IN ECONOMICS Easy understanding of data/information. Calculate derived quanitities. Summarize data. BASIC TOOLS OF ECONOMIC ANALYSIS TABLE BASIC TOOLS OF ECONOMIC ANALYSIS CHARTS Are sketches that show the relationship between variables. TYPES OF CHARTS Bar chart Pie chart Statistical chart Pictorial chart RELEVANCE OF CHARTS Show a vivid presentation of economic and statistical result. Introduction of lessons. BASIC TOOLS OF ECONOMIC ANALYSIS PIE CHART BASIC TOOLS OF ECONOMIC ANALYSIS GRAPH A statistical representation drawn to show the relationship between variables. RELEVANCE OF GRAPHS Illustrate basic concepts. Indicates the association of two or more variables. Helps for easy understanding of informations. Serves for strengthening of points. BASIC TOOLS OF ECONOMIC ANALYSIS GRAPH Economics as Discipline MICROECONOMICS Focuses on individual and firm behavior, market mechanisms, and the allocation of resources. It explores topics like supply and demand, pricing, and consumer choice. MACROECONOMICS Looks at the economy as a whole, analyzing aggregate indicators such as GDP, inflation, and unemployment. It investigates how various economic policies can influence overall economic stability and growth.  in three words, what is economics?  References https://www.youtube.com/watch?v=BZsWAI0LhjA https://www.youtube.com/watch?v=x-hYzRncxTc https://www.investopedia.com/terms/c/comparativeadvantage.asp https://quizlet.com/530958724/econ-101-ch-1-4-flash-cards/ https://www.investopedia.com/terms/p/price-controls.asp https://study.com/academy/lesson/what-is-global-trade-definition-advantages-barriers.html https://www.youtube.com/watch?v=4uLBDsg3vW0 https://www.investopedia.com/terms/s/social-welfare-system.asp https://www.britannica.com/topic/negative-externality https://www.youtube.com/watch?v=ZvLd0qIV6cM https://www.youtube.com/watch?v=DAF81UKWCOI https://www.youtube.com/watch?v=lWIeqUvUrMQ https://library.arihantcollege-bwd.ac.in/wp-content/uploads/2022/05/Tools-For-Economic-Analysis.pdf https://www.investopedia.com/terms/m/marginal-analysis.asp https://www.youtube.com/watch?v=_TsyUrSkRqU&t=48s https://www.economicsdiscussion.net/margin/margin-concept-importance-and-roles-economics/25754