Lesson 1.

1: Economics as a Social Science - Asks what products and services an economy should focus on
Economics producing.
- Seeks to understand how choices are made - Forces societies to consider which of their members’ needs they will
- Is considered a social science as it seeks to study humans with prioritize.
empirical tools For whom to produce?
The Economic Problem - Asks what methods will be used in order to produce the goods and
- Human wants are unlimited; however, resources are scarce. services needed.
- The reason why individuals are forced to make choices - Considerations include the use of manual labor, automation, or a mix
Scarcity of both.
- The limited availability of a resource, good, or service How to produce?
- A resource is scarce when quantity is limited relative to the demand for - Asks who should receive the final goods and services produced by the
it. economy.
Choice - Goods can be given to all equally, or given to those who need it most.
- Because there is scarcity, people have to choose which wants to satisfy - Another consideration is whether goods should be given to those who
first. can afford it.
People decide how to allocate their limited resources.
Utility Factors of Production
- The satisfaction or usefulness the consumption of a good can bring - On a micro level, scarce resources refer to time, money, and
- One of the considerations when making decisions opportunities for new experiences.
Tradeoff - On a macro level, there are four resources that societies have to
- Involves a sacrifice that must be made to get a certain product or properly allocate.
experience. Four resources under macro level are:
Opportunity Cost 1. Land
- The value of the next best alternative - Refers to resources that can be attributed to the land or the sea.
- What we give up by choosing something else - Consists of all natural resources, physical land, and even raw materials.
- Includes the monetary costs, time, and effort - Examples: (Solar and wind energy), (Coal, oil, and fossil fuels), (Crops
Microeconomics and plant life)
- Subset of economics that focuses on the decisions of smaller agents. 2. Labor
Macroeconomics - Refers to the tangible human element in the production process.
- Subset of economics that focuses on aggregates and groups of agents. - These are the contributions of the workforce, whether physical or
mental.
The production possibilities frontier is a fundamental model that - Examples: (Courier for food and parcel delivery), (Teachers in the
economists use to illustrate the concepts of scarcity, choice, and classroom), (Security guard at banks)
opportunity costs.

Lesson 1.2: Economics as an Applied Science 3. Capital

What does growth look like? - Refers to investments made to improve production.
The Philippines has often been given the title of a tiger economy, or an - It can come in the form of physical capital or human capital.
economy poised to breakout as a stronger power. - 2 types of capital.
However, apart from the numbers, how do we know our economy is > Physical Capital - Physical tools and equipment that make
doing better? production more efficient
> Human Capital - Investments made toward improving the human
Three Economic Questions element of production
What to produce? 4. Entrepreneurship
- The intellectual capacity to organize and put together other factors of - The macroeconomic goals are:
production to produce goods and services the society needs. 1. Low unemployment – “A person is unemployed if they are
actively seeking work but are unable to find any.” “They
Economic growth refers to an increase in the GDP of a country within a represent a factor of production (labor) that is not being
specific time period. Economic development focuses on the efficiently allocated.”
improvement of the welfare of a country’s citizens. 2. Stable inflation rate – “Having prices remain stable allows
households to consume what they need. Increasing prices means
Economics is valuable as a discipline because of how it teaches you to that families will have to consume less.” “Erratic changes in price
make better decisions for yourself, the people around you, and also affect how individuals prepare and budget their financial
future generations. resources”.
3. Economic growth – “The increase in real gross domestic
Lesson 3: Philippine Socioeconomic Development in the 21st product or GDP.” “GDP is the measure of the value of all final
Century goods and services produced in a country over a given period of
Economic Systems time.”
- System that dictates how resources are allocated to different sectors of
society. GDP can be measured in three ways:
- Who answers the three economic questions (what to produce, how to Expenditure Approach - GDP = C + I + G + NX
produce it, and for whom to produce it for). Consumption (C)
Traditional Economic System Investments (I)
- Answers the economic questions through the honoring of tradition and Government spending (G)
established trends. Net exports (NX)
- Often little division of labor, and jobs are usually inherited from Income Approach - GDP = W + R + I + P
parents. Wage (W)
- Can still be seen in some rural or indigenous communities. Rent (R)
Command Economic System Interest (I)
- Central authority provides the answers to the three economic Profit (P)
questions.
- The role of this central authority is usually filled by the government.
Market Economic System
- Has little to no government intervention.
- The free market and the opportunity for profit answers the three Nominal vs. Real GDP
economic questions - Real GDP focuses on the value of goods and services
Mixed Economic System produced in a given time period with constant prices. The
- System that takes the best characteristics from each of the other three use
systems. of constant prices means that it is computed using the
- A balance between the free market and government intervention. prices
- All economies have a mixed system, though there are no two that are of a year called the base year.
alike. 4. Equity in income distribution
- Each country has its own system that fits the needs of their society. - Income distribution talks about how the national
output is
Macroeconomic Goals distributed to the population.
- Tangible targets that almost all economies strive towards. -Income inequality occurs when some people earn more
- If hit, they allow countries to improve their socioeconomic than
development. others.
 - Equity - fairness, giving more to those who need more.
-Equality - giving everyone the same resources.

Modern Econ. Problems of the Philippines

- The primary economic problems that the country has to contend with
are poverty, corruption and the pursuit of sustainable and
inclusive economic growth.