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    Lesson 1 - Introduction To Economics

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    Shanna Cielo Jean Berondo
    The document provides an introduction to economics, defining key concepts like scarcity, opportunity costs, and goods. It explains that scarcity means human wants exceed limited resources, forcing people to make choices and trade-offs. Various examples are given to illustrate opportunity costs and how decisions change based on costs.

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    Lesson 1 - Introduction To Economics

    Uploaded by

    Shanna Cielo Jean Berondo
    22 views19 pages
    The document provides an introduction to economics, defining key concepts like scarcity, opportunity costs, and goods. It explains that scarcity means human wants exceed limited resources, forcing people to make choices and trade-offs. Various examples are given to illustrate opportunity costs and how decisions change based on costs.

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    Lesson 1_Introduction to Economics

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    The document provides an introduction to economics, defining key concepts like scarcity, opportunity costs, and goods. It explains that scarcity means human wants exceed limited resources, forcing people to make choices and trade-offs. Various examples are given to illustrate opportunity costs and how decisions change based on costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    22 views19 pages

    Lesson 1 - Introduction To Economics

    Uploaded by

    Shanna Cielo Jean Berondo
    The document provides an introduction to economics, defining key concepts like scarcity, opportunity costs, and goods. It explains that scarcity means human wants exceed limited resources, forcing people to make choices and trade-offs. Various examples are given to illustrate opportunity costs and how decisions change based on costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 19

    INTRODUCTION TO

    zECONOMICS
    z

    Objectives:

    § Define economics

    § Identify the key concepts in economics (Goods,


    Scarcity and Opportunity Costs)
    z

    Its definition
    z

    Natural
    resources such
    as minerals,
    forests, water
    and unimproved
    land.
    z

    Physical and
    mental talents
    that people
    contribute to the
    production
    process.
    z

    Produced goods
    that can be used
    as inputs for
    further
    production
    z Ability of people in
    organizing the
    resources of land,
    labor and capital to
    produce goods,
    seek new business
    opportunities and
    develop new ways
    of doing things.
    z
    z

    Wants Vs Needs
    Maslow’s Hierarchy of Need
    z

    Need is something needed to


    survive.

    Want is one step up in the


    order from needs and is simply
    something that people desire
    to have, that they may, or may
    not, be able to obtain.
    z
    Scarcity

    § Condition in which our wants are


    greater than the limited resources
    available to satisfy those wants.

    – 3 Effects of Scarcity:
    Choices, Need for a Rationing
    Device and Competition
    z

    “There is no such thing as free lunch.”


    “free education”
    “free medical health and so on”
    z

    Situation 1:
    A friend gives you a ticket to an upcoming event
    for zero price (you pay nothing). Does it follow
    that zero price means zero cost?

    “Zero Price Doesn’t Mean Zero Cost”


    z

    Situation 2:
    Ed, attends classes Monday to Thursday every week. Every time he
    choses to go to class, he gives up the opportunity to do something else,
    such as earn Php 150 an hour working at a job.
    On Tuesday, an offer was offered to Ed Php 500 to skip his class. He
    knows that if he attends his class, he will forfeit Php 500. What will Ed
    do?
    “The higher the opportunity cost of doing
    something is, the less likely it will be done.”
    Image Reference:

    z Trade off for buying loaf bread for Php 66 in Cherry


    Foodarama can be the Pan Americana loaf bread in the
    same store or the Ichipan in SM Savemore.

    The opportunity cost for buying Downy 40ML at Php 104 in


    Cherry Foodarama is Php 5.00

    The opportunity cost for buying Pringles ( Original/Sour &


    Cream/Cheesy Cheese) 42G Php 110 in SM –Shaw Hypermarket is
    Php 4.50
    Compute for the opportunity cost of Surf Powder Active
    Clean at Php 110 bought in Puregold Price Club.

    Compute for the opportunity cost of Pascual Creamy Delight


    Yogurt at Php 20 bought in SM-Shaw Hypermarket.
    z
    Because of scarcity, a Whatever the rationing device,
    rationing device is people will compete for it. Scarcity
    needed and competition are linked.

    SCARCITY

    Because of scarcity, When choices are


    people must make made, opportunity
    choices costs are incurred

    “Changes in opportunity cost affect


    behavior.”
    z

    “Uninttended Effects”

    Situation:
    Maya, 16 yrs old, currently works after school at a convenient
    store. She earns Php 100 an hour. Suppose the state
    legislature passes a law specifying that the minimum peso
    wage a person can be paid to do a job is Php 200 pesos an
    hour. What might be the intention of the legislature in passing
    this law? What might be the possible unintended effects?
    People would want themselves better off…
    Idea of Incentive and Exchange
    z
    z
    Y

    When can we say that a


    best decision is made? X

    § Marginal Benefits (MB) > Marginal Cost

    § Efficiency

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