Applied Economics Prelim
Economic Resources
also known as factors of production, are the resources used to produce goods and services
Positive Economics
deals with what is things that are actually happening such as the current inflation rate, the number of employed labor, and the level of the Gross National Product
Traditional Economy
decisions are based on traditions and practices uphold over the years and passed on from generation to generation
Scarcity
insufficiency of resources to meet the wants of consumers and insufficiency of resources for producers that hamper enough production of goods and services
Gross National Product
is the market value of final products, both sold and unsold, produced by the resources of the economy of the given period
Economic System
is the means through which society determines the answers to the basic economic problems mentioned
Market Economy
is the most democratic form of economic system
Opportunity Cost
refers to the value of the best forgone alternative
Normative Economics
refers to what should be-that which embodies the ideal such as the ideal rate of population growth or the most effective tax system
What to produce and how much
society must decide what goods and services should be produced in the economy
Land
soil and natural resources that are found in nature and are not man-made
Microeconomics
studies the decisions and choices of the individual units and how these decisions affect the prices of goods in the market
Wage
the income received by labors is referred to as
Interest
the owners of capital earns an income called
Alfred Marshall
well-known economist described economics as a study of mankind in the ordinary business of life
a. Traditional Economy b. Command Economy c. Market Economy
3 Economic Systems
a. what to produce and how much b. how to produce c. for whom to produce
Basic Economic Problems of Society
a. Land b. Labor c. Capital
Economic Resources
Relative Scarcity Absolute Scarcity
Scarcity may be:
Macroeconomics
is a division of economics that is concerned with the overall performance of the entire economy
How to produce
is a question on the production method that will be used to produce the goods and services
For whom to produce
is about the market for the goods
Macroeconomics
is about the nature of economic growth, the expansion of productive capacity, and the growth of national income
Microeconomics
is concerned with the behavior of individual entities such as the consumer, the producer, and resource owner
Gross Domestic Product
is defined as the market value of final products produced within the country
Command Economy
is the authoritative system wherein decision-making is centralized in the government or a planning committee
Relative Scarcity
is when a good is scarce compared to its demand. Occurs not because the goods is scarce and is difficult to obtain but because of the circumstances that surround the availability of the good
Absolute Scarcity
is when supply is limited
Economics
it is the social science that involves the use of scarce resources to satisfy unlimited wants
Capital
man-made resources used in the production of goods and services, which include machineries and equipment
Rent
owners of lands receive a payments known as
Labor
physical and human effort exerted in production