REVISITING-ECONOMICS-AS-A-SOCIAL-SCIENCE.pptx

For Applied economics

1. OBJECTIVES Differentiate economics as social science and applied science in terms of nature and scope. Examine the utility and application of applied economics to solve economic issues and problems.

2. What is economics? Is the study of the ways that individuals and societies allocate their limited resources to satisfy their unlimited wants. Scarcity – is the limited availability of commodity, which may be in demand in the market or by the commons. Also includes an individual’s lack of resources to buy commodities.

3. ECONOMICS Is from the Greek word “ oikanomia ” meaning “household management.”

4. Adam Smith (1723-1790 ) Father of Classical Economics Economics is concerned on the production and distribution of wealth.

5. The production and distribution of wealth will happen in a market economy which the “ invisible hand ” is taking in-charge.) Invisible Hand mechanism is like there are unseen forces who control the activities in the market.

6. “Why some countries are so rich while others are so poor? He answered: “The growth process begins with rising labor productivity, which is a result of specialization, or the division of labor.”

7. If the country wants to prosper they need to divide the task among its specialization. This will give to higher productivity and result to greater overall output, which in turn leads to higher wages and rising consumption.

8. Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses. Lionel Robbins (1898-1984 ) He linked the word “scarcity and human behavior”.

9. Economics deals with the efficient use of scarce resources to satisfy the unlimited wants of the society.

10. Economics is ultimately concerned with why, when, and how human beings trade with each other in a society.

11. RESOURCES Natural and Man-made Materials use to produce products. Proper management, distribution & allocation of resources will suffice the welfare of human and society. How do we measure if there are equal distribution and efficient management of resources in the society? There are indicators to evaluate if the management is doing the best for the society.

12. Economic Goals Efficiently means the ability to produce a desired result with the least cost possible or without any waste. It is achieved when society is able to get the greatest amount of satisfaction from the available resources. Full employment is an economic situation when all available labor resources are fully utilized.

13. Economic Goals Equity treats a valuable support to achieve fairness and greater outcomes while equality upholds equal opportunity among others. Economic stability refers to the strong macroeconomic foundation where employment, production, and prices are firm and constant.

14. Economic Goals Economic growth refers to the situation wherein there is an increase in the overall output or production. The economy is able to produce more of the goods and services in given time.

15. Economic as a social science Studies human behavior just like psychology and sociology. Studies how individuals make choices in allocating scarce resource resources to satisfy their unlimited wants.

16. Economic resources or factors of production Land Labor Capital Entrepreneurship

17. Economic resources or factors Land The resources consist of free gifts of nature which includes all natural resources above, on, and below the ground such as soil, rivers, lakes, oceans, forests, mountains, mineral resources and climate. labor Refers to all human efforts, be it mental or physical, that help to produce want satisfying goods and services.

18. Economic resources or factors capital Man-made resources used in the production of goods and services, which include machineries and equipment. entrepreneurship Develops an idea into a business. An entrepreneur combines the other three factors of production to add to supply.

19. GOODS – which yields to your satisfaction. It is anything used to satisfy your wants and needs. TANGIBLE GOODS – material goods or commodities INTANGIBLE GOODS – when they are in the form of services. Those rendered by doctors , engineers, doctors and other professionals.

20. Goods may also be classified according to use. CONSUMER GOODS – goods for the ultimate consumption of the consumers. Ex: toothpaste, bath soap, etc. CAPITAL GOODS or INDUSTRIAL GOODS used in the production of other goods and services. Ex. buildings, machinery, equipment ESSENTIAL GOODS – used to satisfy the basic needs of man Example: foods, medicine LUXURY GOODS – goods man may do without, but may give comfort and Satisfaction. Ex. Perfume, cakes, chocolates, expensive cars. ECONOMIC GOODS – goods which are useful and scarce; with value attached to them and a price has to paid for their use. If a good so abundant and it can satisfy everyone’s needs without anybody paying for it, then that good is free. The air is free, but the air from an aircon is an economic good. Kinds of Goods

21. 2 branches/ fields of economics Macroeconomics Microeconomics

22. macroeconomics Deals with the economic behavior of the whole economy or its aggregates such government, business and households.

23. microeconomics Deals with the economic behavior of individual units such as the consumers, firms, and the owners of the factors of production.

24. Basic economic problems of society What to produce? How to produce? For whom to produce?

25. Economic system Traditional Economy . Decisions are based on traditions and practices upheld over the years and passed on from one generation to generation. Command Economy. This is the authoritative system wherein decision-making is centralized in the government or a planning committee. Market Economy . This is the most democratic form of economic system.

26. WHY ECONOMICS IS IMPORTANT? It helps to understand why there is a need for everybody, including the government, to budget and properly allocate the use of whatever resources are available. It enable to take a look on how the economy operates and to decide if the government officials and leaders are effective in trying to shape up the economy and formulate policies for good of the nation.

27. POSITIVE ECONOMICS VS. NORMATIVE ECONOMICS Positive economics deals with what is- things that are actually happenings such as the current inflation rate, the number of employed labor, and the level of the Gross National Product. Normative economics refers to what should be – that which embodies the ideal such as the ideal rate of population growth or the most effective tax system.

28. MEASURING THE ECONOMY Gross Domestic Product ( GDP) is the monetary value all the finished goods and services produced within a country’s boarders in a specific time period, usually one year. Gross National Product ( GNP ) is the market value of final product, both sold and unsold, produced by the resources of the economy on the given period.