ARALING PANLIPUNAN - 9

Economics helping society decide on the optimal allocation of your

limited resources.

Classical increase productivity & efficiency, specialization and

division of labor, products were neither uniform nor organized.

Xenophon Deconomus about efficient management and leadership.

Plato blueprint for an economy where cities are founded on key
principles of specialization and division on labor.
Book: The Republic
Adam Smith Laissez Faire, Let Alone Policy, Father of Modern
Economics.
Book: An inquiry into the nature and causes of the wealth of
nations.
David Ricardo Law of diminishing marginal returns, Law of comparative
advantage.
Thomas Robert Maltheus Malthusian Theory; effects of rapid increase of
population.

Classicists markets works best when they are left alone anf that there
is nothing the smallest role for government; Laissez Faire.

Francois Quesnay Physiocrats

Book: Tableu Economique

Neo Classicists modern economic theory evolve, method is clearly

scientific w/ assumption and hyphothesis and attempts to drive general
rules about behavior of firms at customers.

John Maynard Keynes Father of Macroeconomics, Law of supple and

demand, general theory of employment, interests and money.
Karl Marx Father of Communism, das capital, classics society.
Aristotle topics and rhetoric viewed exchange as a way to satisfy
individual and collective watts.
THINGS RELATED TO ECONOMICS

Sociology composition of society

Ethics morality of men
History how tools of early men gave rise to our present way of life.
Political Science study of government
Psychology scientific study of the mind
Geography study of physical features
Chemistry composition of chemicals
Biology study of living things
Physics study of matter
Mathematics use of numbers
Statistics learning from data

SCARCITY
a situation where there is unlimited wants but limited resources.
Shortage when producers will or will not offer goods and services.
Hoarding keeping of the food supply by business men [Group: Cartel]

FOUR BASIC ECONOMIC QUESTIONS

1. What to produce?
2. How to produce?
3. How much to produce?
4. For whom are the goods to be produced?

CHOICE AND DECISION

Choice power to choose

Decision reaching a conclusion

2 TYPES OF CHOICES

1. Individual made by a single person for their own satisfaction

2. Social made by the government to satisfy the needs of the
society
NEEDS AND WANTS

Needs things that

are required for surviving
Wants things that
arent necessary but
we desire for

MASLOWS HIERARCHY OF NEEDS

[By: Abraham Maslow]

FACTORS THAT CHANGE OUR NEEDS AND WANTS

-Education
-Income
-Age
-Taste and Preferences
-Profession

ERG MODEL
[By: Clayton Alderfer]

EXISTING RELATEDNESS GROWTH

MICRO AND MACRO

Micro individual; small unit of economy

Macro totality; aggregate

ALLOCATION AND ECONOMIC SYSTEM

the systematic distribution of a limited quantity resources over
various time periods, products, operations or investments.

Command Government decides in addressing the economy problems

Mixed command- Capitalism & Socialism

a.) Traditional Economy

- Answers problems based on customs, traditions, beliefs and norms of
society
- Individuals have no right to decide. It depends on the society

b.) Market Economy

- Answers the four basic economic questions
- Market is an arrangement between sellers and buyers to make a
transaction

Feudalism- An economic and political system that dealt with extensive

land ownership
Mercantilism- Focuses on accumulating gold and silver through
colonialism Wealth=Power
Capitalism- Economic system in which the ownership of factors of
production is in the hands of a private group or individuals

c.) Command Economy

Communism- The state controlled and owned all the industries and
resources of the country All people are equal
 Socialism- Combination of capitalism and communism
Fascism- Resources and industries are controlled by the state under a
dictator The people are for the state, not the state are for the
people

CONSUMPTION

CHARACTERISTICS
[Key: ABRNALA]

-Alert
-Budget Conscious
-Reasonable
-Not affected by advertisement
-Analytical
-Looking for alternative
-Avoid panic buying

RIGHTS

-Right to have basic needs

-Right to choose
-Right to security
-Right to clean and orderly environment
-Right to proper information
-Right to organize

LAWS THAT PROTECTS THE CONSUMERS

RA 7394 - Consumer Act of the Philippines

RA 7581 - Price Act
RA 71 - Price Tag law
RA 3740 - Law on Advertising, labeling and branding
RA 6675 - Generics Act of 1988
PD 1770 - National food Authority (NFA)
Article 1546 - Civil code of the phil. (law on Sales)
Article 2187 - Civil code of the phil. (law on extra contractual obligations)
Article 188 - Revised penal code (law on trademark)

GOVERNMENT AGENCIES

- Dept of Trade and Industry (DTI)- Quality, safety, weight and

measures, labelling of price, packaging, warranties, and advertisement
- Dept of Health (DOH)- All health products
- Dept of Energy (DOE)- Malpractices of gas/LPG dealers
- Dept of Agriculture (DA)- All agricultural products
- Dept of education (DEPED)- Proper dissemination of information
and consumer education
- Local Government Units (LGUs)- Monitor the prices of goods and
services, Act on consumers complaints
- Print and Broadcasting Companies- Mass media

FACTORS THAT AFFECTS OUR CONSUMPTION

Income - Consumption depends on how much income we have

Prices- Deciding factor whether to buy or not
Occasion- occasional buying
Values- Thinking thoughts
Imitation/Bandwagon- Replica or fake in a low price
Advertisement- Buying because of advertisement
Seasons- Climate prices in time of season

PRODUCTION
-Process of using resources to produce goods and services.

FACTORS

Land Resources provided by nature

Capital Resources made by men
Labor Human efforts that are involved in the process
Labor Supply Total working hours of workers
Entrepreneur Person in charge of making decisions

PRODUCTION FUNCTION
Rent- Payment of use of land
Wages Amount of money received by workers
Interest Payment after deducting all expenses in the operation
METHODS OF PRODUCTION

Mechanization Done mostly by machines

Production Line Conveyor belt is used
Division of Labor Each worker has their own task
Automation Everything is done by machines
Computerized Machines Computer controlled machines are used

PRODUCTION COST

-Fixed Cost
-Variable Cost
-Total Cost

COST FOR EVERY PRODUCT

-Average Fixed Cost (AFC)
-Average Variable Cost (AVC)
-Average Total Cost (ATC)
-Marginal Cost (MC)

TFC+TVC=TC TVC/TP=AVC
TC-TVC=TFC TC/TP=ATC
TFC/TP=AFC TC-TFC=TVC
STANDARD OF LIVING

Poverty Standard- Unable to meet their basic needs Poorest of the

Poor
Bare-living Standard - Income is barely enough for their needs
Decency Standard - Assurance of providing all basic needs and wants
Comfort Standard - Income is sufficient enough to enjoy comforts in life
Luxury Standard - Price is not a problem

LAWS OF CONSUMPTION

Law of Economic order - individuals naturally satisfy their needs to

live
Law of Variety - use variety of products to satisfy our needs and wants
Law of Diminishing Utility - satisfaction in consuming goods and
services
Law of Harmony - Products that complement to each other
Law of imitation - satisfaction in imitating other people, celebrities