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