Quiz (Lahh siguro meron na mas better saken na dumatingš)
What provision/laws should be made for economic growth?
A society uses all its resources for current consumption. If a society uses all its resources, then its production capacity will not increase. The standard of living of the people and the income of the workforce remain constant until the standard of living will decline in the future. The society must decide also on the part of the resources to be saved for future progress.
APPLIED ECONOMICS ON BASIC ISSUES AND PROBLEMS
Also, in the division of labor, it allows workers and firms to produce more. This is because: (a) agents focus on areas of advantage due to natural factors and skill levels; (b) the agents learn and invent; (c) the agents take advantage of economies of scale Division and specialization of labor only work when individuals can purchase what they do not produce in markets.
5 TRAITS OF A TRADITIONAL ECONOMY
CENTER AROUND FAMILY OR TRIBE EXIST IN A HUNTER-GATHERER AND NOMADIC SOCIETY TRADE RELIES HEAVILY ON BARTER PRODUCE ONLY WHAT YOU NEED (SURPLUS OR LEFTOVERS ARE RARE) THEY EVENTUALLY EVOLVE TO FORM SOME FORM OF CURRENCY FOR TRADE
Capital
Can represent the monetary resources use to purchase natural resources. Example: Companies use ______ to buy land and other goods
Traditional Economy (They use barter instead of money)
Decisions are based on traditions and practices held over the years and passed on from generation to generation. Methods are stagnant and therefore not progressive. Traditional societies exist in primitive and backward De civilizations. Societies with traditional economies depend on agriculture, fishing, hunting, gathering or some kind of them. __________________________. Most traditional economies operate in emerging markets and developing countries. They are often in Africa, Asia, Latin America, and the Middle East.
What to produce?
Each and every economy must determine what products and services, and what volume of each, to produce. In some way, these kinds of decisions should be coordinated in every society. In a few, the govt decides. In others, consumers and producers decisions act together to find out what the society's scarce resources will be utilized for. In a market economy, this 'what to produce? choice is made mainly by buyers, acting in their own interests to fulfill their needs. Their demands are fulfilled by organizations looking for profits. For instance, if cellphones are in demand it will pay businesses to produce and sell these. If no one desires to buy radio sets, it is not worth producing them. In case a manufacturer produces an item which buyers don't buy in much quantity, there will likely be inadequate income. The manufacturer will have to enhance the quality and modify the product to match buyer tastes. If the item is still not preferred, the producer will most likely halt the production. In this manner, buyers get the goods they need. Customers rule the 'what?' decision. They 'vote' for certain products and services by spending money on those they like. Each and every manufacturer has to offer what buyers want so that they can compete effectively against other manufacturers. Government authorities also perform some part in making 'what?' decisions. For example, a law demanding all ladies to wear a helmet generates demand for helmets, and profit-seeking businesses will produce them.
Incentives
Government give little __________ to be efficient and profitable.
Equality
Government may provide more equitable distribution of resources.
Efficiency
Government owned firms have less incentives to be efficient
Workers
Households will also face decisions on how much to work. For example, working overtime at the weekend will give extra income at the weekend will give them extra income to spend, but less leisure time to enjoy it. A ________ may also wish to spend more time in learning new skills and qualifications. This may limit their earning power in the short-term, but enable a greater earning power in the long-term. For example, at 18 a student could go straight into work or they could go to university where they will hope to gain a degree and more earning power in the long-term.
What to Produce?
If there is scarcity of goods in a society, the firms have to make wise decision on what goods/service should be produced and determine the quantity to produced. For example, which do we produce more, masks or canned goods? But we need capital goods like machines, or consumer goods like laptops. The society must decide the type and quantity of good/service to be produced to meet the immediate needs of the society.
Ownership
Industry owned and managed by the government
Problems
Inefficiency, bureaucratic, shortages, surpluses, less choice, less freedom.
Market Economy
Market Economy Open competition Ease of starting a business Lower cost of goods Innovation
Prices
Price controls
Examples
Soviet Union, China (until 1970s). Cuba
Government
The _____________ has finite resources and its spending power is limited by the amount of tax that they can collect. The ______________ needs to decide how they collect tax and then they need to decide whom they spend money on. For example, the ______________ may wish to cut benefits to those on low income to increase incentives to work. However, cutting benefits will increase inequality and relative poverty. Firms may also need to make long-term investment decisions to invest in new products and new means of production
How to Produce?
The production of goods or services needs effective methods and processes. For example, you can produce PPEs using sewing machines; sardines using aqua resources like fish and land resources like tomatoes. The production requires more labor and capital investment.
For whom to Produce?
The society would always consider the immidiate beneficiary of the goods. For example when we produce masks and PPEs we suppose to produce first these for the frontliners of COVID Pandemic fight. A society decides on the distribution of the goods and services among the members of society who need them the most.
How to produce?
This basic economic problem is with regards to the mix of resources to use to create each good and service. These types of decisions are generally made by companies which attempt to create their products at lowest cost. By way of example, banking institutions have substituted the majority of their counter service individuals with automatic teller machines, phone banking and Net banking. These electronic ways of moving money, utilizing capital as opposed to labour resources, have decreased the banks' production costs. In the Nineteen fifties dams were being constructed in China by countless people making use of containers and shovels. On the other hand dams were being constructed in the united states by using huge earth moving devices. The initial approach to production, using a resource combination which includes a small capital and much labour, is labour-intensive while the second, utilizing a little labour and a lot of capital, is capital-intensive. Each one of these 'how' decisions was made based on lowest cost and accessible modern technology.
For whom to produce?
This basic economic question is focused on who receives what share of the products and services which the economy produces. The portion of production which each person and family can consume is determined by their income. Income is distributed in line with the value of resources we have to sell.
Command Economy
This is the authoritative system wherein decision-making is centralized in the government or a planning committee. Decisions are imposed on the people who do not have a say in what goods are to be produced. This economy holds true in dictatorial, socialist, and communist nations. is a key feature of any communist society. Cuba, North Korea, and the former Soviet Union are examples of countries that have _________________, while China maintained a ________________ for decades before transitioning to a mixed economy that features both communistic and capitalistic elements.
Market Economy
This is the most democratic form of economic system. Based on the workings of demand and supply, decisions are made on what good and services to produce. People's preferences are reflected in the prices they are willing to pay in the market and are therefore the basis of the producer's decisions on what goods to produce. The United States, England and Japan are all examples of market economies. Alternatively, a command economy is organized by a centralized government, that owns most, if not all, businesses and whose officials direct all the factors of production.
APPLIED ECONOMICS ON BASIC ISSUES AND PROBLEMS (Scarcity)
_____________________ seeks to solve the problems on __________. This happens when human wants for goods and services exceed the available supply. In a modern economy, it is evident that a division of labor happens when people earn income by specializing in what they produce. They will use that income to purchase the products they need or want every day (BC Campus 2020).
Economic resources
also known as factors of production, are the resources used to produce goods and services. These resources are, by nature, limited and therefore, command a payment, that becomes the income of the resource owner.
Applied Economics
helps you understand the basic problems facing the world today. It helps you become a well-rounded thinker. And most importantly, it prepares you to be a good citizen.
The concept of opportunity cost
holds true for individuals, businesses, and even a society. In making a choice, trade-offs are involved
Mixed Economy
is a system that combines characteristics of market, command and traditional economies. It benefits from the advantages of all three while suffering from few of the disadvantages. has three of the following characteristics of a market economy. First, it protects private property. Second, it allows the free market and the laws of supply and demand to determine prices. Third, it is driven by the motivation of the self-interest of individuals.
Opportunity Cost
is the next best alternative foregone. When land is devoted exclusively to the cultivation of rice, we give up an output of bananas or mangoes which could have planted on that land area. A producer who decides to transform all his leather into shoes, gives up the chance to produce bag with that leather. A school teacher who could have worked in a bank, gives up the salary that she would have earned as a bank employee. A manager who quits his job in order to take up a master's degree, gives up his salary as a manager. That salary is his opportunity cost. Without scarcity, a person does not need to make choices since he/she can have everything he/she wants.
Producers
needs to remain profitable (revenue higher than costs). So it will need to produce the goods which are in high demand and respond to changing demands and buying habits of consumers for example, switching to online sales as the high street declines. will need to constantly ask the best way of producing goods. For example, purchasing new machines can increase productivity and enable the firms to produce goods at a lower cost. This is important for fast- changing industries where new technology is frequently reducing costs of production. Without firms adapting to how they produce, they can become unprofitable. - Firms may also need to make long-term investment decisions to invest in new products and new means of production.
Entrepreneurs
organizers and coordinators of other factors of production: land, labor, and capital someone who uses his initiative, talent and resourcefulness to create economic goods.
Labor
physical and human effort exerted in production also called "human resources" or all human efforts, be it mental or physical, that help to produce satisfying goods and services. it covers manual workers like Construction workers Machine operators Production workers As well as professionals like: Nurses Lawyers Doctors The terms also include: Jeepney Drivers Farmers Fishermen In return, he earns an income in the forms of wages and salaries.
Foreign Exchange
refers to the dollar and dollar reserves that the economy has. is part of economic resources because we need foreign currency for international trading and buying materials from other countries. International medium - dollar
Capital
represents the major physical assets, individuals and companies use when producing goods and services Example: Buildings, Vehicles, Equipment
Land
soil and natural resources that are found in nature and are not man-made. Owners of land receive a payment known as rent. these resources consist of gifts of nature which include: Soil Rivers Lakes, oceans Forests Mountains Mineral resources