HAND OUT 1 ECONOMICS WITH TAXATION

Prepared by: @alegnanozit DEFINITION OF ECONOMICS Definition: Economics is a study of the ways in

Our main livelihood or resources comes from agriculture. We are not blessed with technological advances like the United States. So it wouldnt be feasible for us to create satellites or space shuttles because our resources wont allow us to. Like what we said earlier, our wants are limited by our means. However, we can take advantage of its natural resources by producing agricultural goods and boosting our tourism services. Because these are the things that are within our means. How to produce? Identify the different method or means to produce such commodities. The society must determine whether to employ labor intensive production or capital intensive production. Labor Intensive Production: uses more human resources or manual labor in producing goods and services than capital resources. This is advisable to societies with large population. Example, China. Usually, the labor of this countries are cheap. Goods are produced by employing more of cheaper resources and less of more expensive inputs. Capital Intensive Production: employs more technology and capital goods like machineries and equipments in producing goods and services than labor resources. Example: Japan Mostly utilized by countries with high level of capital stock and technology and with scarce labor resources. How Much to Produce? Society must identify the number of commodities to be produced in order to answer the demand of the society.

which people use resources to satisfy their wants.

CONCEPT OF SCARCITY It refers to the tension between our limited resources and our unlimited wants and needs For an individual, resources include time, money and skill. For a country, limited resources include natural resources, capital, labor force and technology. It pertains to the limited availability of economic resources relative to societys unlimited demand for goods and service. How to narrow this gap between what people want and what they are able to get is the basic problem studied in economics. We shall refer to this problem as the problem of scarcity.

BACKGROUND AND HISTORY POSITIVE AND NORMATIVE ECONOMICS I. a. b. c. d. Four Basic Economic Questions What to produce? How to produce? How much to produce? For whom to produce?

What to produce? There is a need to identify the commodities needed to be produced for the utilization of the society in everyday life. A society must also take into consideration the resources that it possesses before deciding what goods to produce. For example: Philippines

Underproduction will result to a failure to meet the needs and wants of society. On the other hand, overproduction results to excess goods and services going to waste. For Whom to Produce? Identify the population which demands commodities produced in a society. Economist must determine the target market of goods and services which are to be produced to understand their consumption behaviour. 3 ES IN ECONOMICS
Efficiency Equity Effectiveness

FACTORS OF PRODUCTION a. b. c. d. Land Labor Capital Entrepreneurship