Economics

97問 • 1年前

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is a social science concerned with using scarce resources to obtain the maximum satisfaction of the unlimited material wants of a society.

Economics

An economic school of thought that emerged in the late 18th to 19th century which believes that the market is a self-regulating system. This school of thought emphasized the importance of free market and minimal government intervention.

Classical Economics

An economic school of thought that is built upon classical economics. Emerging in the 20th century, this school of thought assumes that the individuals and firms are rational and they are acting according to their own self-interest.

Neoclassical Economics

An economic school of thought which believes that government intervention stabilizes the economy. This school of thought believes that during recession, the government can stimulate the economy while preventing inflation during economic boom. Likewise, the government can also promote full employment.

Keynesian Economics

An economic school of thought which argued that social classes divides the economy. The school of thought believes that capitalism is exploitative and that the proletariats will eventually overthrow the bourgeoise and establish a socialist communist society.

Marxist Economics

Father of Economics and Father of Capitalism. Known for Laissez Faire, a French term which literally translates to "let alone", "let do" or "let it be".

Adam Smith

is an economic policy with which there is only minimum government interference in the economic affairs of the society.

Lassez Faire

A metaphor for unforeseen forces that move the economy. This means that the free market is composed of economic agents that act in their own best self-interest which in turn, delivers the best economic outcomes.

The Invisible Hands

Proponent of "Law of Comparative Advantage" and "Law of Diminishing Return"

David Ricardo

Countries can benefit from international trade by specializing in goods with lower opportunity cost. Often, the one who can offer goods with the best package at lesser production costhad the comparative advantage.

Law of Comparative Advantage

Adding an additional factor of production will result to smaller increases in output.

Law of Diminishing Marginal Return

Proponent if Malthusian Theory

Thomas Malthus

As a population increase, the food supply decreases. The population increases faster than the increase in the supply of food.

Malthusian Theory

Law of Diminishing Marginal Utility Welfare Economics

Alfred Marshall

As consumption increases, the marginal utility decreases. The first unit of consumption is highest because as utility increases, the marginal utility decreases.

Law of Diminishing Marginal Utility

Economic policies and interventions lead to better outcomes by addressing market failures and externalities.

Welfare Economics

Efficient Market Hypothesis

Paul Samuelson

Financial markets are generally efficient in processing and reflecting available information, and that everything is fairly and accurately priced. This makes it difficult for investors to beat or outperform the market

Efficient Market Hypothesis

Father of Macroeconomics

John Maynard Keynes

The state has the larger function of maintaining balance in the economy through its expenses or taxation.

General Theory of employment, interest and money

Father of Communism and Author of Das Capital and Communist Manifesto.

Karl Marx

A politicial and economic system in which the means of production are owned and controlled by the state. In a communist society, there is no private property, and the state provides for the basic needs of its citizens.

Communism

Division of Economics

Microeconomics Macroeconomics

Concerned with the behavior and activities of specific economic units- individual, household, firms etc. The central concept is the market.

Microeconomics

Concerned with the behavior of the economy as a whole with respect to output, income, price level, foreign trade, unemployment, and other aggregate economic variables. The central concept is aggregate.

Macroeconomics

The Economic Resources/Factors of Production

Land Labor Capital Entrpreneural Ability

One factor of production which include land used for agricultural or industrial purposes as well as natural resources found above or below the soil. Example: Natural Resources

Land

Productive services embodied in human physical efforts, skill and intellectual power. It consists of human time consumed in production

Labor

Durable goods produced in order to produced other goods. This consists of machineries, factories, offices. Example: Washing machine for laundry shop.

Capital

The ability of an entrepreneur to produce the required goods and services and the deciding power of businessmen to implement the right combination of the three other factors of production. Example: Businessman deciding whether to hire ot not additional employees.

Entrepreneural Ability

Economic System

Capitalism (Market Economy) Communism (Command Economy) Mixed Economy

Economic system characterized by private ownership of the means of production (economic resources). In this system, resource owners pursue profit in free and competitive markets. This economic system is based on the principles of private ownership, profit motive, competition, limited government interference, free enterprise, individual initiative, voluntary exchange and economic freedom.

Capitalism

A political and economic system in which the means of production are owned and controlled by the state. In a communist society, there is no private property, and the state provides for the basic need of its citizens. Also known as planned economy, this economic system functions with government or central authority execising significant control over resource allocation,.production decisions and economic planning. In a command economy, the state directs and coordinates economic activities according to central plan. In a command economy, the rights of capitalism which are private properties, profits are not allowed.

Communism

Has an element or more than one economic systems- combining the characteristics of market and command economies. This economic system honors both private and state owned enterprises and the government and the private sectors coexist and play a significant roles in resource allocation, production, and economic decision-making.

Mixed Economy

A place where the producers (sellers) and the consumers (buyers) meet. This is where the producers and consumers agree on the procurement and exchange of goods and services. This is where the people (buyer) are left alone with the businessmen (seller) to make their transaction.

Market

is an interaction between buyer and sellers of trading or dxchange. It is where the consumer buys and the sellers sells.

Market

is where workers offer services and look for jobs, as well as where the employers look for workers to hire.

Labor Market

which include the stock market where securities of corporations are traded.

Financial Market

Categories of Markets

Organized Markets Less Organized Markets Informal Markets Black Markets Decentralized Markets

Markets that have a higher degree of structure and formalization. Organized markets ofteb have specific time and places of transaction which are characterized by central location, sets of rules and regulations that govern the exchange of goods and services and a professional body that enforces these rules and regulations.

Organized Markets

Stock Exchanges Commodity Exchanges Futures Exchanges Bond Market

Market where buyers and traders of stocks can come together to trade.

Stock Exchange

Market where buyers and sellersof commodities like energy, metal and agricultural products are traded.

Commodity Exchanges

Market where buyers and sellers of future contracts can come together to trade. Future contracts are agreements to buy or sell commodities at a certain date in the future at a certain price.

Future Exchanges

market where buyers and sellers of debt securities such as government or corporate bonds can come together to trade.

Bond Market

Markets that have a lower degree of formal structure and other institutional arrangements. Less organized markets often do not have specific time and places of transaction and that transactions could be done anytime and anywhere.

Less Organized Markets.

Unregulated market that exist outside of formal legal frameworks. They often involve direct transactions between individuals or small businesses without the involvement if established institutions. Examples: street vendors, flea markets, and local bazaars.

Informal Markets

Undergroud or illegal markets where goods or services are traded in violation of government regulations. Black markets arises when certain goods or acrivities are prohibited, restricted, or heavily taxed. Examples: trade of illegal drugs, counterfeit goods or smuggled items.

Black Markets

Markets that operate on distributed networks without a central authority or intermediaries. Example: Decentralized exchanges (DEX) for trading cryptocurrencies.

Decentralized Markets

The way that various industries are classified and differentiated in accordance with their degree and nature of competition for products and services.

Market Structures

Market Structure

Perfect Competition Monopoly Oligopoly Monopolistic Competition

(many identical products, many sellers, many buyers): A market structures where there are numerous small firms that produce identical products. In this market, there is ease of entry and exit as there is very little to no barrier to entry, however, no individual firm has the ability to influence market prices. Example: market for agriculture produces.

Perfect Competition

(One unique product, one seller, many buyers): A market structure where there is only one firm in the market, which has complete control over the supply of a unique product or service. Due to the absence of competition, a monopolist has a significant market power and can set prices and quantities. Barriers to entry, such as high start-up vosts or legal restrictions, prevent new firms from entering the market. Example: Utility company, like electricity.

Monopoly

(similar or differentiated product, few sellers, many buyers): A market structure where there are few large firms dominate the market. These firms may produce similar of differentiated prodcuts and have significant market power. Example: Market for automotive, telecommunications, and airlines.

Oligopoly

One similar unique product, many seller, mamy buyers): Market structure characterized by a large number of firms that produce similar but not identical products. Each firm has some control over its pricing. Example: market for restaurants snd consumer electronics.

Monopolistic Competition

created by the sellers

Supply

generated by buyers

Demand

Buyer's willingness and ability to pay sum of money for some amount for particular good or services.

Demand

The quantity of a good or service which sellers desire to sell as a goven price.

Supply

Latin phrase that literally translates to "All other things being constant/unchanging". It is used as an assumption to isolate the effect of a specific variable or factor on a particular economic phenomenon or relationship. By holding other relevant factors constant, economists can analyze the impact of a single variable shile assuming that all other variables remain unchanged.

Ceteris Paribus

Other things being constant (ceteris paribus), of the price increases, the wuantity suppled of a good rises. If the price of the good decreases, the quantity supplied of a good deacreases. The quuantity of good which buyers are ready yo purchase varies inversely with the price of the goods.

Law of Supply

represents the relationship between the wuantity supplied for a commodity (dependent variable) and the price of the commodity (independent variable).

Supply Function

Equation of Supply Function

Qs = f (P)

Other things being constant (ceteris paribus), if the price increases, the quantity demanded of a good increases. The quantity of the goods ehoch sellers are willing to sell varies directly with the price if the good.

Law of Demand

represents the relationship between the quantity demanded for a commodity (dependent variable) and the price of the commodity (independent variable)

Deman Function

Graphical representation of Supply Schedule

Supply Curve

Graphical representation of Demand Schedule

Demand Curve

Other things that could affect the supply or demand other than the price

Non price determinants

Causes of movement in the Demand and Supply Curve

Non price determinants of Demand and Supply

Non price determinants of Supply

Production Technology Availability of raw materials and resources

Non price determinants of Demand

Income Taste Expectations Prices of related goods Population or number of customers

is the state in which market supply and demand balance each other. This means that in the market there is an equilibrium if the demand is equal to the supply.

Equilibrium

is the only price where the plans of consumers and the plans of producers agree - that is, where the amount of the product consumers want to buy (quantity demanded) is equal to the amount producers want to sell (quantity supplied).

Equilibrium price

when the market fails to find an equilibrium point - which is the state of a market when there are no shortage or surpluses of supply and demand at a market-clearing price (this is also referred to as equilibrium price).

Disequilibrium

The imbalance between supply and demand - such that supply exceeds the level of demand or demand exceeds the available supply.

Market disequilibrium

If the price is below its equilibrium level, the quantity demanded is greater that the supplied. The difference represents a _____. ______ is excess supply

Surplus

If the price is below its equilibrium level, the quantity demanded is greater than the quantity supplied. The difference represents a shortage. Shortage happens if the consumers demand is higher than the available supply.

Shortage

is a measure of how much buyers and sellers reapond to changes in the market conditions.

Elasticity

Coefficient is greater than 1

Elastic

Coefficient is lesser than 1

Inelastic

Coefficient is equal to 1

Unitary Elastic

states that as income increseas, the proportion of income spent on food decreases, while the proportion spent on other goods, such as luxury items or services, increases. This reflects the income elasticity of demand for different types of goods.

Engel's Law

describes how a change in a consumer's income influences their purchasing decisiona. When a person's income increases, they may experience an income effect that leads to an increase in their overall demand for goods and services. Conversely, a decrease in income may result in a decrease in overall demand.

Income effect

a condition in which demand for a commodity rises with a rise in consumer income and declines with a decline in consumer income.

Positive income elasticity of demand

are those goods by which if there is an increase in income, it's demand also, increases. Whereas, if there is a decrease in income, it's demand will also decrease.

Normal Goods

are goods by which an increase in income also causes an increase in demand. However, while normal goods are necessities, ____ goods aren't

Luxury Goods

Condition in which demand for a commodity decreases with a rise in consumer income and increases with a fall in consumer income.

Negative income elasticity of demand

are commodities that decreases in demand as income increases.

Inferior Goods

is an economic concept that measures the responsivenes in the quantity demanded of one good when the price for another good changes

Cross elasticity of Demand

are goods that compete with each other. Ex: The demand for meat will fall if the price of fish (a substitue) decreases.

Substitute Goods

are goods that are used jointly. Ex. Cement and steel bars. When the price for cement falls, the price for steel bars (a complement) will increase.

Complements

occurs when consumers adjust their consumption patterns in response to a change in the relative prices of goods or services. If the price of particular goods rises, consumers may substitute it with a cheaper alternative, leading to a decrease in the quantity demanded.

Substitution Effect

a concept used to measure the satisfaction or pleasure derived consuming goods and services.

Utility

Refers to the overall satisfaction or happiness a consumer derives from consuming a certain quantity of a good or service

Total Utility

refers to the additional utility or change in utility gained by consuming one additional unit of a good or service.

Marginal Utility

a principle that states that as a person consumes more units of a particular good or service durinf a specific time period, the additional satisfaction or utility derived from each additional unit tends to decrease. The more consumers consume something, the less additional satisfaction they get from each additional unit of consumption.

Law of Diminishing Marginal Utility

Consumers aim to maximize their total utility by allocating their income in a way that maximizes the satisfaction they derive from various goods and services. The optimal consumption point is reached when the marginal utility per peso spent is raual across all goods and services.

Optimal Consumption

Trends and Issues Overall

Cydrix James Natanauan · 154問 · 1年前

Trends and Issues Overall