Applied Economics Lesson 1, Slides of Economics

Download Applied Economics Lesson 1 and more Slides Economics in PDF only on Docsity! INTRODUCTION TO APPLIED ECONOMICS Prepared by: Melvin O. Alejandrino ECONOMICS Is a social science that studies the production, distribution and consumption of goods and services. Wealth, Making Choices or Allocation?Philippines is known to be one of the richest countries during the 80’s 75% of oranges in U.S.A. is used for manufacturing juices. 2 out of 5 people buy products from foreign stores like Ebay and Amazon. Manny Villar is the Richest Filipino alive. About 10000kg of Pork is consumed by Purefoods for Fiesta Ham. Most people buy products endorsed by famous artists. 5 Elements in the Definition of Economics 1. Economics as a Social Science 2. Resources and Study of Economics 3. Human Wants and Economic Analysis 4. Scarcity as a Source of Economic Problem 5. Allocation and Art of Economizing 1. Economics as a Social Science Because it includes different people and how they interact to one another with regards to goods and services. Two Characteristics of Resources 1. Limited Resources – includes length of time and difficulty in order to be produced. A. Non renewable – took a long span of time to produce. Trees, Oil, Mineral Resources B. Time Consuming – includes processes and a short span of time to be finish. Education, Nutrition, Building, Infrastructure Two Characteristics of Resources 2. Competing Uses - Resources that can be used in different ways. 3. Human Wants and Economic Analysis Taste Income Environment Socioeconomic Status SCARCITY VS. SHORTAGE VS. SURPLUS Shortage – when demand is more than supply. SCARCITY VS. SHORTAGE VS. SURPLUS SURPLUS – When the supply is more than the demand. SCARCITY VS. SHORTAGE SCARCITY PERMANEN T NATURE NATURAL RESOURCE S SHORTAGE TEMPORAR Y MARKET PRODUCT How do you treat the problem of scarcity?1. Slow down the expansion of human wants. 2. Hasten the expansion of limited resources. 3. Combination of two. THREE MAJOR MECHANISMS OF ALLOCATION MARKET SYSTEM COMMAND SYSTEM TRADITIONAL SYSTEM ALLOCATION The process of putting resources for their particular uses. What to produce? The consumers express their preferences so producers produce these products. How to produce? The producers will think of the best way to produce products in the fastest way possible using the most efficient materials. For whom to produce? Producers should identify who is their target market.