The Nature and Importance of Economics

Principles of Economics with TAR

2. •Economics comes from Greek
word “oikanomia” meaning
“house hold management”

3. •According to Fajardo, Economics
is the proper allocation and
efficient use of available resources
for the maximum satisfaction of
human wants.

4. •Castillo viewed Economics as
the study of how man could
best allocate and utilize the
scarce resources of society to
satisfy unlimited wants.

5. •Webster defined Economics as
a branch of knowledge that
deals with the production,
distribution and consumption
of goods and services.

6. •Webster defined Economics as
a branch of knowledge that
deals with the production,
distribution and consumption
of goods and services.

7. What SCARCITY Means?
Scarcity refers to the condition
wherein most things that
people want are available only
in limited supply.

8. What SCARCITY Means?
Scarcity refers to the condition
wherein most things that
people want are available only
in limited supply.

9. What is an Economic Good?
An economic good is anything,
either a physical commodity or a
service, which yields utility and
with could command a price if
brought or sold in the market.

10. What is an Economic Good?
An economic good is anything,
either a physical commodity or a
service, which yields utility and
with could command a price if
brought or sold in the market.

11. What Unlimited Wants Mean.
Wants refer to “a person’s desires
or preferences for specific ways of
satisfying a basic need. Thus, to
satisfy an unsatisfied need, a
person wants particular products
or services.

12. HISTORY OF ECONOMICS
1700s
Adam Smith
-considered the father of
modern economics and
capitalism. On 1776 published
books “Wealth of Nations”has
a huge impact on economic
thought still today. He
reasoned that markets would
work best if left alone and
promoted that little government
intervention in the economy
was best.

13. HISTORY OF ECONOMICS (cont.)
1800s
Thomas Malthus
-studied populations,
and his main
contributions include his
work on the relationship
between food supply
and populations.

14. HISTORY OF ECONOMICS (cont.)
1800s
Karl Marx -is most noted for his advocacy
of socialism and communism
over capitalism, which he
strongly denounced. He is
arguably one of the most
influential economists in history.
Marx believed that communism
was inevitable in the process of
evolution.

15. HISTORY OF ECONOMICS (cont.)
1800s
Alfred Marshall
-focused on the study of
microeconomics and wrote
Principles of Economics,
which is one of the most
influential economic textbooks
of all time. Marshall proposed
the idea that economics was
a scientific discipline that
required more mathematics
and less philosophy.

16. HISTORY OF ECONOMICS (cont.)
1900s
John Maynard Keynes
-English economist who
offered an explanation of
mass unemployment and
suggestions for government
to cure unemployment in his
influential book: “ The General
Theory of Employment,
Interest and Money.” (1936)

17. HISTORY OF ECONOMICS (cont.)
-In the 1980’s, the capitalist countries of the West and
socialist countries of the East rediscovered the power of the
market to produce rapid technological change and high living
standards.
-In 1989 Western Europe was successful in revolution and
forced the socialist countries to cast off their central planning
apparatus and allow market forces to spring up.
-From 1917 to 1980 about 1/3 of the world was ruled by
Marxian doctrine.

18. IMPORTANCE OF ECONOMICS
•We cannot live without consumption and production
•guide us how to make a living
-how to use wisely our money
-how to run business
-how to distribute properly our available
scarce resources
-how to maximize our profits
•in order to understand problems facing citizen
and the family

19. IMPORTANCE OF ECONOMICS (cont.)
•To help the government promote and growth and
improve the quality of life while avoiding
depression
•To analyze fascinating patterns of social behavior

20. OPPORTUNITY COST
–may be defined as “ the cost of
choosing to use resources for one
purpose measured by the sacrifice
of the next best alternative for
using those resources.”

21. FOUR BASIC ECONOMIC QUESTIONS ?
1.What to produce?
-what kind of goods and services should be
produce.
2.How to produce?
-How shall these goods and services be
produced.

22. FOUR BASIC ECONOMIC QUESTIONS ?
(cont.)
3.How much to produce?
-identifies the number of commodities
needed to be produced in order to answer the
demand of the society.
4.For whom to produce?
-distribution of goods and services.

23. FACTORS OF PRODUCTION
1.Land
-refers to all natural resources, which are given by,
and found in nature, and therefore not man made.
2.Labor
-is any form of human effort exerted in the
production of goods and services. Labor covers a wide
range of skills, abilities and characteristics.

24. THE ECONOMIC RESOURCES (cont.)
3.Capital
-man-made goods used in the production of
other goods and services.
4.Entrepreneurship
-is a person who organizes, manages and
assumes the risks of firm, taking a new idea or a
new product and turning it into a successful
business.

25. DIVISIONS OF ECONOMICS
Microeconomics
-deals with the individual decisions of units
of the economy-firms and households, and
how their choices determine the relative
prices of goods and factors of production.

26. TWO MAJOR BRANCHES OF ECONOMICS
(cont.)
Macroeconomics
-deals with “the behavior of the economy
as a whole with respect to output, income,
the price level, foreign trade,
unemployment, and other aggregate
economic variables.”

27. ALWAYS REMEMBER
“MY DREAMS ARE WORTHLESS, MY
PLANS ARE DUST, UNLESS THEY ARE
COVERED WITH ACTIONS…
I WILL ACT NOW”
Thank you…..