This document provides an introduction to economics, including key concepts like scarcity, economic resources, and the basic economic problem. It defines economics as the study of efficiently allocating scarce resources to meet unlimited wants. The main economic resources are land, labor, and capital. Due to scarcity, economic actors must make choices and trade-offs known as opportunity costs. Economics analyzes how individuals and societies make decisions regarding what, how, and for whom to produce goods and services.

1. INTRODUCTION TO
ECONOMICS

2. ECONOMICS
• Came from the GREEK WORD “OIKONOMIA”
Which means management of household expenditures.
• Is about the management or operation of the entire
productions and consumptions of the people to be
able to meet everyone’s need
• Study intelligently the process of how to allocate the
limited natural resources, human resources, capital
goods to satisfy the unlimited wants of the people.
• Therefore, Economics is the study of efficient and
effective allocation of scarce resources to satisfy
unlimited wants and needs of the people”.

3. LACK OF MONEY AND
SCARE RESOUCES
BUY AND SELL
.
INNSUFICIENT
PURCHASING POWER

4. DEPRIVATION

5. What is scarcity?
It is a condition where there are insufficient resources to satisfy all the
needs and wants of a population.

6. IS WHEN THE SUPPLY IS LIMITED
Oil is scarce in the country because we have
no oil deposits in our country which we can
source our petroleum needs, oil deposits
mostly found in the Middle East, China,
Russia, and the United States, so we rely on
imports from oil producing countries.
IS WHEN A GOOD IS SCARCE COMPARED TO
ITS DEMAND. Relative Scarcity occurs not
because the good is scarce and is difficult to
obtain but because of the circumstances that
surround the availability of the good.
2 types of Scarcity

7. ECONOMIC RESOURCES
Economic resources, also known as factors of
production, are the resources used to produced
goods and services. These resources are, by
nature, limited and therefore, command
payment that becomes the income of the
resource owner. In short these are resources
that are used for the production of economic
goods.

8. These resources are: LAND, LABOR, and
CAPITAL

9. LAND
LAND soil and natural resources that are found in nature
and are not manmade.
• Trees, water forest mineral and oil.
• These natural resources even without the help of
mankind could produce something for their consumption.

10. LABOR
• Physical and human effort exerted in
production. It also refers to the labor
force the exertions of human energy in
order to produce.
• According to the Philippine Labor Law,
labor force starts from age 15 years old
and above who are able and capable of
working and could render service,
employed or unemployed under the
labor code.
• Some of those not included in the
counting of labor force are those who
are fulltime students, housewives and
those disabled persons who are
incapacitated to work

11. —
Labor Force is
divided into
two categories:

12. CAPITAL
• Anything manmade
materials or resources
that may use in the
production to produce
more goods and service.
• Materials that is used in
operating a business.
• Another definition
anything that is
manmade like
machineries and
equipment that are used
in the production of
another product would
be rather be under .

13. Mental Exertion
Labor using mostly brain for decision making
and planning
Physical Exertion

14. CHOICE ON DECISION MAKING
Because of the presence of
scarcity, there is a need for man to
make decisions in choosing how
to maximize the scarce resources
to satisfy as many wants as
possible..
OPPORTUNITY COST refers to the
value of the best foregone
alternative. When the land is devoted
exclusively to the cultivation or rice,
we give up an output of bananas or
mangoes that we could have planted
on that land area

15. ECONOMIC AS SOCIAL SCIENCE
Economic is a different science from biology and chemistry as
these are physical sciences. Economics is a social science
because it studies human behavior just like psychology and
sociology. A social science is broadly speaking, the study of society
and how people behave and influence the world around them. As a
social science, economics studies how individuals make choices in
allocating scarce resources to satisfy their unlimited wants.

16. Initially the commercial world comprises
of only two types of person – the
consumer and the producer. The
consumers are those who consume or
buy the good(s)/service(s)
produced/made by the producers. On the
other hand, the producers are those who
produce; those who make or provide
goods to the buyers. The producers also
avail the services of the consumers. For
examples producers of breads need
baker, and the baker needs bread also. In
a simple market economy we can
illustrate this simple circular flow as
basic circular flow.
THE CIRCULAR FLOW OF ECONOMIC
ACTIVITY

17. THE DIFFERENT KIND OF GOODS
Goods – material or tangible things which are consumed that gives satisfactions.
Economic Goods – are
tangible things which are
useful but scarce for
example Oil Gold, Woods.
Free Goods - are things
which are useful but
abundant for example air,
water, ocean land
.
Consumer Goods -are
those things which are
ready for consumption and
gives direct satisfaction for
example books, houses,
computers, and cars.
Producers Goods – are goods which
are used for the production of other
goods and services. These are also
known as capital goods. For example
wood for furniture, sugar cane to make
sugar, flour for bread and etc.

18. Title or Position
CLASSIFICATION OF
GOODS AS TO NECESSITY
Luxury Goods Basic Goods
Things which are not really
needed they give prestige
and adds status symbol, one
can live even without those
things, it is also known as
wants. For example: branded
cars such as BMW,
Lamborghini, branded phone
with excessive accessories
or upgrades, mansion and
resorts.
Things which
are really needed.
One cannot live without
them. For example
are food, clothing, water,
shelter, money, health
care, sanitation.

19. TWO DIVISIONS OF ECONOMICS
MICROECONOMICS – Micro means small. It refers to the
study of small unit of the societies like family, house hold,
persons, consumption, spending, production and investment
MACROECONOMICS – Macro means big. It pertains to the
study of large unit of the society or the economic as a
whole.

20. BASIC ECONOMIC PROBLEM OF THE COUNTRY
1. WHAT TO PRODUCE?
This is the decision on what goods and service to produce and
their quantities. The necessity of the products and the demand of
the people determine the products to produce, and the type of
service to provide.

21. 2. HOW TO PRODUCE?
This is the decision in the production; the process and method of
producing. It answers some of these questions: Are we
endangering the environment if we putting our waste anywhere?
Are the products not harmful to the health of the people?
This also refers to the resource mix and technology that will be
applied in production.

22. 3. FOR WHOM TO PRODUCE?
It refers to the people who will demand for the product or the target
market. Who would accept the product from the market? We
should consider the demographic profile like age, gender and their
buying capacity.
4. AVAILABILITY OF THE PRODUCE
These are some of the questions to be considered: Are the
resources available all throughout the year either locally made or
export material? Will the product be a finished product, processed
product or by product? Will it be seasonal or occasional?