BASIC MICROECONOMICS (Econ1)
Objectives: at the end of the module, the students is expected to
A. Define economic terms
B. Identify the elements involved in the objective of satisfying wants.
MODULE 1: ECONOMIC ACTIVITY
Today, the current economic situation seems to interest everybody in society: the provider, the laborer,
the bank teller, the accountant, the college professor and even the students. While some of these
people have no actual background in economics, it comes as a challenge for college students to
familiarize him with what economics is all about. He gets to learn how to analyze economic theory and
explain why things are happening in the economy.
Over the past years, the study of economics widened to encompass a wider scope of topics. Samuelson
and Nordhaus’ Economics (2001) mentioned the major definitions in this growing subject. Among these
are:
1. Economic studies how prices of land, labor and capital are determined and how these process
are used to allocate scare resources.
2. Economics looks into the behavior of financial market and how it allocates capital to the rest of
the economy.
3. Economics looks into the distribution of income and into ways of helping the poor without
causing harm to the country’s economic performance.
4. Economics studies the impact on growth of government spending, taxes and budget deficits,
5. Economics examines the movement in income and employment during the different stages of
the business cycle with the goal of developing government policies that will improve economic
growth.
6. Economics looks at trade patterns among nations and analyzes the impact of trade barriers.
7. Economics examines growth in developing countries and suggests ways to encourage the
efficient use of resources.
Man’s Basic Economic Activity
Man’s basic economic activity consists of efforts to satisfy human wants with the use of goods
and services. Three elements are involved in this objective of satisfaction as discussed in this section.
The first is human wants. The best description that can be made of human wants is that they
unlimited and vary from the needs of survival, otherwise known as basic needs to higher needs for a
comfortable and more meaningful life. In addition, man is subject to create wants, develop them due to
the effects of advertising and demonstrative effects of consumption as dictated by our culture.
Economics is concerned with the satisfaction of many of these human wants especially the basic ones.
The second element is the use of resources. The basic economic resources of nation consist of
land, labor, capital and entrepreneurship. Since these items are available in limited amounts, man has to
learn to allocate them properly in order to maximize the number of wants that can be satisfied. The
economy should pay the owners of these basic factors of production for their resources such as rent for
land, wage or salary for labor, investment for capital and profit for entrepreneurship.
The last element is the technique of production which shows how resources are used and
combined in production. This, production is described as capital-intensive or labor-intensive depending
on what factor is predominantly used.
In effect, the basic activities of man also constitute the basic exchange that takes place between
the business firm and the consumers.
Progress test
I. Define the following term base on YOUR understanding in the above context.
a. Basic needs
b. Capital
c. Economics
d. Entrepreneur
e. Labor
f. Land
g. Wants
II. Choose and explain at least three (3) definitions of economics.
III. What is the difference of needs and wants?
a. Prove that wants are unlimited?
b. What are the bases of human wants and how does it affect the willingness of
achieving it.
c. Do you agree that the needs have scare resources? Why or why not?
IV. What are the roles of the second element in the economy?
V. Define capital- intensive and labor-intensive. Give an example on how the company
benefits from having capital- intensive and labor-intensive production.
Note:
A. Write your answer on a long bond paper.
B. Submission will be soft copy and hard copy.
For soft copy, kindly submit to
[email protected] on or before October 19, 2020
For hard copy, kindly have a compilation of all the answers, have it on a long regular folder.
Submission will be announced later.
