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Part 1
Basic Microeconomics - Study of households 2 Branch:
ECONOMICS - Oiko (House) Nomien - (Management): Science that deals with the activities of man - Classified as Social Science: Because it deals with the study of human life
Social science - An interrelated Discipline that studies various aspects of human behavior
Activities of economics
Economic Activities - Interaction among economic units that involve distribution, consumption, exchange of goods, and services
- BUYING OF GOODS AND SERVICES: Anything that satisfies wants Free Goods - Unlimited supply in quantity Economic Goods - if there is a price
2. PAYING TAXES
Part 2
ECONOMIC SYSTEM - An institution that dominates in a given economic
3 kinds of economic system
CAPITALISM - The market economic factor of individual/distribution and manage by private individuals
Characteristics of capitalism ● There's private properties ● There's Economic freedom ● There’s Free enterprise ● There's Profit motive
COMMUNISM - (North korea, Cuba)
- Government owns all or most enterprise
- Command economy
- There's a presence of central planning
SOCIALISM - (CHINA, UK, GERMANY)
- Major strategic industry managed by government
- Mining, electrification, transportation, communication
4 Factors of production LAND - Natural resources CAPITAL ENTERPRISE LABOR - Exertion of effort in a production of goods and services ● Manual ● Professional Labor (Nurses) ● Labor of management ( Managers) ● Labor enterprise (Owner of establishment) ● Labor of invention (Scientist)
Characteristics:
- Private property : Right to own
- Economic Freedom : Freedom of choice
- Free Enterprise : Quick competition
- Profit Motive : Free to invest in capital
Karl Marx
- Father of Socialism
- German Philosopher
Adam Smith is called the "father of economics"
Ceteris paribus is a Latin phrase that generally means " all other things being equal.
Minor industry
- Not classified by government
- Conclude by private individual
INFLATION - Sustained increase in the price of goods and services
Criteria = Productivity - efficiency contribute = Education Training and experience Division of labor Economic stability - if there's absence of unemployment and inflation"
NEDA - NATIONAL ECONOMIC DEVELOPMENT AUTHORITY
Demand-pull inflation - occurs when the overall demand for goods and services in an economy exceeds the available supply, causing prices to rise.
Cost push - Increase cost of production
PART 4
ELASTICITY - Reaction or the response, degree of the responses of qty. Demand & qty supply of Goods and services
PRICE ELASTICITY DEMAND - Degree of responsiveness of the qty. Demand to any change in its price
- ELASTIC: Change in price results to greater change in qty Demands (Lux goods)
- INELASTIC: Change in price, Lesser change in qty demand (Basic coms)
- UNITARY: Changes in price equal change in qty demand
- PERFECTLY ELASTIC: CHange in price, infinite change in qty demand
- PERFECTLY INELASTIC: CHange in price, no change in qty demand
INCOME ELASTICITY - Degree of responsiveness of percentage in change of income
INFERIOR GOODS - Demand increases as income decrease (Dried Fish, Noodles)
MIDTERMS - Part 1
FACTORS AFFECTING DEMAND ELASTICITY
- TYPE OF GOODS - anything that satisfies wants
- necessity, comfort COMFORT FOODS - Are goods that make life nicer and happier LUXURY GOODS - Enjoyment, sports car COMFORT AND LUXURY IS ELASTIC
- PRICE
- INCOME
- AVAILABILITY OF SUBSTITUTE (Substitute Availability)
TECHNOLOGY - techniques of production
PRICE - Monetary value of goods and services
DOLE (DEPARTMENT OF LABOR AND EMPLOYMENT)
RTWPB (REGIONAL TRIPARTITE WAGES PRODUCTIVITY BOARD) - Determine the minimum wage of workers
NLRC (NATIONAL LABOR RELATIONS COMMISION)
COST - Expenditure and money
SUPPLY - Schedule of the quantity goods that sellers are able to sell at a given time
FACTORS THAT AFFECT SUPPLY
1) PRICE
2) PRICES OF RELATED COMMODITIES
3) COST OF PRODUCT INPUTS
4) STATE OF TECHNOLOGY
5) GOVERNMENT POLICY (TAXATION POLICY)
CHARACTERISTICS OF SUPPLY
1) UPWARD SLOPING
FACTORS AFFECTING SUPPLY ELASTICITY
1) PRICE
2) TIME TO PRODUCE
3) AVAILABILITY OF RESOURCES
4) SIZE OF MARKET
5) NUMBER OF SELLERS
6) STOCKING CAPACITY
FIXED COST - (TC−VC)
- Cost that does not vary with the label of output. Ex: Buildings, land, machines & equipment VARIABLE COST - (TC−FC)
- Cost that vary with the label of output TOTAL COST - (FC+VC)
- The sum of fixed cost and variable cost AVERAGE COST - (TC/Q)
- Cost in producing a single unit of goods MARGINAL COST - (ΔQ/ΔTC)
- Cost in producing additional unit of goods TOTAL REVENUE - (P×Q)
- Receipts or sales of the business
PROFIT/LOSS
If total revenue is greater than total cost = PROFIT If total revenue is lesser than total cost = LOSS If equal = NORMAL PROFIT
FINALS - Part 1
MARKET STRUCTURE - Refers to the different types of markets or industries classified according to the degree of competitiveness.
FOUR TYPES OF MARKET STRUCTURE :
● PERFECT COMPETITION - Many sellers of standardized product ● MONOPOLISTIC COMPETITION - Many sellers of differentiated products ● MONOPOLY - single seller for which there is no close substitute (Monopolies known as price maker & price Searcher) ● OLIGOPOLY - Few sellers of a standardized or a differentiated product (Technological, automobile, pharmaceuticals, mass media)
PRODUCTION FUNCTION - Refers to the physical relationship between fix inputs & output of goods of time using given production process [ It shows how inputs (like labor, machines) are turned into output (goods).]
FIXED OUTPUTS - are machinery quantity cannot be changed in the short run (machineries,buildings,land) [The amount of goods produced doesn’t change , no matter what—for now.]
VARIABLE INPUT - whose quantity. Can be varied as response to the firms desire to lower
or raise its output (Labor, raw materials, electric power)
[Things a business can change easily to increase or decrease production.]
OPTIMAL OUTPUT - Level of production that maximizes a firm's profit or achieves its
economic objectives like cost minimization of efficiency
[The best amount of goods a firm should produce to make the most profit .]
SHORT RUN - period of time where the firm uses both variable and fixed inputs
[Some inputs are fixed (can’t be changed) You can only change variable inputs (like workers
or materials)]
LONG RUN - period of time sufficiently long to allow a firm to vary on its outputs (no inputs are fixed) [You can buy more machines, build a new factory, etc.]
COLLUSION - When two or more firms secretly agree to cheat the market, like fixing prices or dividing markets, instead of competing with each other.
● TRADEMARK - A symbol, word, or design legally registered to represent a company or product, protecting the brand from being copied. Trademarks help consumers identify the source of goods or services.
- ECONOMIC BARRIERS - Barriers that come from the structure of the economy or
market, such as high fixed costs, that make it harder for new firms to compete profitably.
- CONTROL OF RESOURCES - When a few firms control key resources that are essential
for production, it makes it difficult for new firms to get started.
- NETWORK OF ETHICS - Established connections and relationships between
businesses, customers, and suppliers, which make it difficult for newcomers to break in.
- BRAND LOYALTY - When consumers prefer established brands over new ones, making
it hard for new firms to attract customers.
ECONOMIES OF SCALE - Cost advantages that firms experience as they produce more of
a good or service.
NATURAL MONOPOLY - occurs when a single firm can produce the entire output of a
market at a lower cost than two or more firms could. caused by or existed by government
franchise
LAW OF DIMINISHING RETURNS - as you keep adding more of one input (like labor or
materials) to a fixed amount of other resources (like machinery), the additional output you
get from each new unit of input will eventually decrease.
3 STAGES IN PRODUCTION
- INCREASING RETURNS - Output increases at an increasing rate. When you add more
inputs (like labor), you get more and more output, and the increase in output is greater than
the increase in input.
- DIMINISHING RETURNS - Output increases, but at a decreasing rate.
As you keep adding more of a particular input, the increase in output becomes smaller.
- NEGATIVE RETURNS - Output decreases as you add more of the input.
At this point, adding more input actually reduces total output. The input becomes so
excessive that it causes inefficiency or chaos.
DIFFERENTIATED PRODUCTS - Different from others, with unique features or branding.
NEGATIVE & POSITIVE EFFECTS ON MONOPOLY
POSITIVE EFFECTS = Efficiency and stability
NEGATIVE EFFECTS = Higher prices and less choice for consumers.
STABILITY - A steady, predictable economy or market with little fluctuation.
RISK COST - The potential loss or uncertainty a company faces with decisions.
MARGINAL COST - The cost of producing one more unit.
AVERAGE COST - The total cost per unit produced.
