Introduction to Economics

Objectives:
Define economics.
Identify the two divisions of
economics.
Identify human wants and resources

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 1 of 16
 Pre-test:
True or false
Economics comes from the Greek
word “oikonomia” which means
household chores.
Economics is considered a field of
social science.
Economics is relevant because it is
part of everybody’s life.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 2 of 16
 4. There are three divisions of economics;
the microeconomics, the macroeconomics
and home economics.
5. As a science, economics is related to
other sciences.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 3 of 16
 ECONOMICS – can be defined as a social
science which deals with the proper
allocation and efficient use of available
resources for the maximum satisfaction of
human wants.
It came from a Greek word “oikonomia’
which literally means household
management.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 4 of 16
 Content of Economics:
Economics is all about how people cope
and deal with the phenomenon of scarcity
and the notion of scarcity is central to the
study of economics.
SCARCITY is a situation wherein the
amount of something available is
insufficient to satisfy the desire of it.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 5 of 16
 THE SCIENCE OF ECONOMICS
Neville Keynes defines art as “ a system of
rules for the attainment of a given end,
whereas science is “a body of systematized
knowledge concerning what is”.
It examines the activities of consumers,
producers, governments and the electorate to
understand how resources are allocated.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 6 of 16
 ECONOMICS is a social science because it
deals with human behavior through its
theory of how people make choices. It seeks
to explain the “why” of things in the world
of economic behavior – production,
consumption, and distribution.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 7 of 16
 These are some of the examples of
everyday questions that seek explanations.
Why has the demand of cars fallen?
Why are prices continuously rising?
Why is the unemployment rate
growing?
Why was the value of Philippine peso
fallen?

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 8 of 16
 These questions involves understanding
the choices that individuals make and the
economic opportunities or constraints that
led to this choices.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 9 of 16
 DIVISIONS OF ECONOMICS
Microeconomics deals with the
problems and analysis of behavior of
individual economic unit such as the
consumer (household), seller (firm) and
owners of factors of production.
Macroeconomics deals with the
problems of the whole economy and
how aggregated

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 10 of 16
 economic units or sectors such as
consumer, business, government and
foreign sectors are interrelated.
Macroeconomics studies the economy as a
whole.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 11 of 16
 ECONOMIC MODELS
Unlike in other sciences where controlled
experiments can be conducted in
laboratories, economics must study human
behavior and its consequences in the
context of everyday life.
The abstraction from reality between the
economic agents and economic variables
are called MODELS.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 12 of 16
 Economic models are the main tools used by
economists to explain economic phenomena.
Another characteristic of economic models
is the distinction between positive and
normative economics.
POSITIVE ECONOMICS is the branch of
economics concerned with the description
and explanation of economic phenomena.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 13 of 16
 It answers the question, “what is”.
NORMATIVE ECONOMICS is the
application of positive economics for the
purpose of generating policy prescriptions. It is
concerned with the question, “what ought to
be” and thus requires value judgment.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 14 of 16
 In taxation for example, positive economics
would determine that cutting income taxes
could increase consumption spending while
normative economics would prescribed
that the rich ought to be taxed more than
the poor.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 15 of 16
 HUMAN WANTS are the goods and
services needed by human beings.
GOODS AND SERVICES are those that
yield satisfaction. It may be tangible or
intangible.

https://cdn.fbsbx.com/v/t59.2708-21/61611221_335607117087735_9152298200781029376_n.p…pRXk&_nc_ht=cdn.fbsbx.com&oh=a833a8fe1db85983b91f432aba37277d&oe=5CFFA0C8&dl=1 2019/6/10, 5K28 PM

Page 16 of 16