CATEGORIES OF RESOURCES
1. LAND -includes all natural resources (gifts of
nature) used in the production process.
2. LABOR or HUMAN RESOURCES - refers to the
physical and mental talents to produce goods and
services.
3. CAPITAL - man-made or manufactured resources
also known as capital goods used in producing
consumer goods.
4. ENTREPRENEURAL ABILITY- special
skillS of an individual needed to produce
goods and services like managerial and
organizational skills.
ECONOMICS AS AN APPLIED SCIENCE
Applied economics involves different ways to
achieve practical objectives by applying economic
theory in the real world.
- It helps students to learn about the relationship of
business and basic economic theories.
- It offers many opportunities to measure their
academic and personal growth and improve their
educational career planning .
- It focuses primarily ob theoretical business
economics.
- It focuses on urban problems, poverty, economic
growth and the environment.
ECONOMIC THEORY
- is a broad concept for the explanation and
understanding of the movement of goods and
services in the market for example , the theories of
the behavior of individuals and institutions engaged
in the production, consumption, distribution and
exchange of goods ans services.
Economic theory uses different economic
models to describe how the people react to a
particular economic situation.
-Economic models maybe in the form of verbal
expression, numerical tables, and mathematical
equations or diagram used to understand
economic events.
The Law of Supply and Demand are good examples
of useful economic model.
The Law of supply states that, other things being
equal, as price increases, the quantity supplied
increases, and the price decreases, the quantity
supplied decreases.
The Law of Demand states that, other things being
equal, as price increases, the quantity demanded
decreases, and as price decreases, the quantity
demanded increases.
WHY STUDY
ECONOMICS?
A. Decision Making Skills
B. Problem Solving Abilities
C. Job Opportunities
BASIC ECONOMIC PROBLEMS IN THE COUNTRY
1. UNEMPLOYMENT - remains a persistent
problem in the Philippines because of increase in
population. The number of people entering the job
market is has been greated than the number of jobs
created.
- The rural-urban migration increases due to
insufficient employment oppurtunities.
- Many of the unemployed individuals are college
students.
What Can Be Done to Solve Unemployment
Problem?
1. Appropriate economic policies for labor-intensive
industire.
2. Improvement in the educational system of the country
especially in the rural areas.
3. Minimize rural-urban migration by improving the
economice environment in the rural areas.
4. Provision of more investment opportunities to
encourage local and international investment like tax
incentives.
5. Proper coordination between government and the
private sector to solve the problem of job mismatch.
6. Decreasing the retirement age from 65 to 60 for
public sector to give chance to younger geneartion to
enter the labor market but providing an attractive
well-defined benefit pensions and retiree health care
for retirees.
7. Slowing population growth. To improve the
standadrd living of the Filipinos, Philippine economic
growth must increase faster than its population.
2. POVERTY - it remained not only an
economic problem but also a social
problem in the country.
Increase of population, increase in the
cost of living, unemployment, inequality in
the distribution of income are some of the
reasons why a decline in poverty is very
slow.
WHAT CAN BE DONE TO SOLVE POVERTY
PROBLEM?
1. Reduce unemployment.
2. Appropriate policy on labor income.
3. Promote economic growth to improve the standard of
living.
4. Provsison of unemployment benefits for those who will be
unemployed due to natural and man-made calamities.
5. Increasing social services like education, health care and
food subsidies to sustainable poverty reduction.
3. QUALITY OF INFRASTRUCTURE
- based on the Global Competitiveness Report , the
Philippines ranks 91st out of 144 countries on a
World Economic Forum survey of infrustructure
quality.
WHAT CAN BE DONE TO IMPROVE THE
QUALITY OF INFRUSTRUCTURE
1. Quality infrastructure increases macro-level
competitiveness and encourages investments. In
order to ease infrustructure constraints, the Phils.
need to achieve a gradual increase in infrustructure
investmente to at least 5% of Gross Domestic
Product (GDP), and increase in the efficiency
spendin.
2. The government shall implement fiscal reform
program.
3. Continues reform in key sectors- particularly
power, roads, and water to improve cost recovery,
competition, and institutional credibility, and to
sharply reduce corruption.
4. Improving central oversight of the planning and
coordination of investments.
5. Focus on investment through public-private
partnerships to address key bottlenecks,and achieve
quick gains in service delivery.
4. INCOME INEQUALITY
Income is the money that an individual earned from
work or business received from an investments.
Income Inequality refers to the gap in income that
exists between the rich and the poor.
MAJOR CAUSES OF INCOME INEQUALITY IN
THE PHILIPPINES
1.Political culture
2. Indirect taxes
3. Income taxes
WHAT CAN BE DONE TO SOLVE THE PROBLEM
OF INCOME INEQUALITY
1. Policies to enforce progressive rates of direct taxation on
income and wealth, especially at the highhest levels.
2. Direct money transfers and subsidize food programs for
the urban and rural poor.
3. Direct governemnt policies to keep the price of essentials
products low.
4. Reform the people's political culture.
5. Raise the minimum wage.
6. Encourage and expand collective bargaining.
7. Encourage profit sharing.
PHILIPPINE SOCIAL ECONOMIC DEVELOPMENT
Socio-Economic Development is the process of social and
economic development of the people in the community. It is
measured with indicators such as:
a. Gross Domestic Product (GDP)
b. Life expectancy
c. Literacy
d. levels of employment
PHILIPPINE DEVELOPMENT PLAN
a. ECONOMIC DEVELOPMENT - the process of
improvung the standard of living of every individual
b. SOCIAL DEVELOPMENT
Social development interventions will directly reduce
poverty in its multiple dimensions by increasing the poor's
access to social services and basic facilities.
- The government is committed to improve the
delivery of health services to reduce maternal
mortality HIV.
- Investment in education will be increased and
improve the quality of public investments.
- Social protection progrms will be developed to
address the different hazards faced by different
localities like, increasing Philippone Health Insurance
(PhilHealth) coverage and benefits.
- The Community-Based Employment Program will
be designed to fucntion as a social protection
mechanism that replaces lost income in times of
calamities. It represents all projects of government that
employ unskilled workers.
- The govt. will also developed housing
options/assistance based on the needs and
affordability of intended housing beneficiaries. The
beneficiaries included informal settlers, victims of
calamities, armed conflict, and low salaried
employees.
“SCARCITY, CHOICE AND
OPPORTUNITY COST”
SCARCITY - is the condition that results
from the imbalance between relatively
unlimited wants and the relatively limited
resources available for satisfrying those
wants.
OPPORTUNITY COST
It is the foregone benefit of the
next best alternative when scarce
resources are used for one
purpose rather than another.
TRADE-OFFS
It involves accepting or choosing less of
one thing to get more of something else.
- Individuals who choose onw good or
services instead of another,or more of one
thing and less of another, are making a
trade-off.
APPLICATION OF DEMAND
AND SUPPLY
DEMAND - is the relationship between quantity and
price. It is also defines as the differenet quantities of
a resource, good or service that consumers are
willing and able to buy at any given time at various
possible prices.
QUANTITY DEMANDED - is the amount of the
commodiy that consumers wish to consume at a
particular level. It increases as the price commodity
falls.
MARKET DEMAND - is simply the sum of all
individual demand.
LAW of DEMAND - states that all other things being
constant, the quantiti of the product that consumers
are willing and able to buy increases. The law of
demand shows an inverse relationship between
price and quantity demanded.
DEMAND SCHEDULE -is the table showing the
quantities of a product that would be purchased at
various prices at a given time and place.
Demand Schedule for T-Shirts for College, June 1
Price (Php) Quantity Demanded
300.00 10
250.00 20
200.00 30
150.00 40
100.00 50
DEMAND CURVE - is a graph of the demand schedule.
Price
500
DEMAND CURVE
400
300
200
100
QD ( T-Shirst)
0 10 20 30 40 50
DEMAND FOR T-SHIRTS
Changes in Demand - The demand curve
reflects the relationship between price and
quantity purchases of t-shirts during the
given period of time. But the price is not the
only thing influence the buyer's willingness
to purchase. Whe this occurs, demand
changes - it increases or decreases.
Supply Curve - shows the relationship
between the price of an item and the number or
units sellers will offer for sale.
LAW OF SUPPLY
States that sellers will offer more an item at a
high price and less at low price.
DETERMINANTS OF DEMANDS
1. Consumers Tastes and Preferences
2. Consumer's Income
3. Population
4. Prices of Realated Goods
a. Substitute Goods
b. Complimentary Goods
5. Expectation of Future Prices
ELASTICITY OF DEMAND
Elasticity describes how much a change in a price
affects the quantity demanded.
DETERMINANTS OF THE ELASTICITY OF
DEMAND
1. Luxuries vs. necessities
2. Proportion of Income
3. Substitutability
4. Time
Price Elasticity of Demand or Elasticity of Demand -
defined as the ratio of the perce tage change in
quantity demande to the percentage change in price
that brings about the change in quantity demande.
Elasticity of Demand = Percentage in Quantity
Deamnded/Percentage Change in Price
Demand is elastic if say, a 10 percent rise in price
leads to a reduction in quantity demanded of more
than 10 percent demand.
Demand is inelastic if such a rise in price reduces
the quantity demanded by less than 10 percent.
When the demand for an item is inelastic, a change
in price will have a relatively small effect on the
quantity demanded.
When the demand for an item is elastic, a small
change in price will have a relatively large effect on
the quantity demanded.
SUPPLY - is defined as the number of items that
sellers are willing and able to sell in the market at
different prices during some specified period of time.
MARKET SUPPLY - is the sum of all individual
supply.
Supple Schedule of T-Shirts (College) June
Price (Php) Quantity Demanded
300.00 50
250.00 40
200.00 30
150.00 20
100.00 10
Supply for T-shirst
Price
300
250
200 Supply Curve
150
100
0 QS (T-shirts)
10 20 30 40 50
CHANGES IN SUPPLY
- refers to a shift in the supply curve. Like deman
supply in a market typically responds to different
factors other than price.
1. Technological Progress
2. Number of Sellers
3. Cost of production
4. Expectations of future price
ELASTICITY OF SUPPLY
- is measured as the ratio of proportionate change
in the quantity supplied to the proportionate change
in price.
High elasticity indicates the supply is sensitive to
changes in prices, low elasticity indicates little
sensitivity to price changes, and no elasticity means
no relationship with price. Also called price elasticity
of supply.
Elasticity of Supply = Percentage Change in
Quantity Supplied/Percentage Change Price
If a change in price has a little effect on the quantity
of a good or service offered for sale, the supply is
inelastic.
When a small change in price produces a large
change in the quantity offered for sale, then the
supply of the good or service is elastic.
Determinants of the Elasticity of Supply
1. Limited amount of raw materials
2. Difficulty of producing goods
3. Time period
a. Market period
b. Short run
c. Log run
4. Production surplus
5. Inventories
Supply and Demand: MARKET EQUILIBRIUM
Market Equilibrium - refers to a condition
where a market price is established through
competition such the amount of goods or
services purchased by buyers is equal to the
amount of goods or services produced by
sellers.
Demand and Supply of T-Shirts
QUANTITY DEMANDED PRICE QUANTITY Qs -Qd
SUPPLIED ( ＋ surplus ; - shortage )
10 300.00 50 ＋ 40
20 250.00 40 ＋ 20
30 200.00 30 0
40 150.00 20 - 20
50 100.00 10 - 40
Demand of Supply of T-Shirts
Price
300 D S
250 Surplus
200
150
Shortage
100
0 Quantity
10 20 30 40 50
WHAT CAN CHANGE EQUILIBRIUM PRICE AND
QUANTITY?
Equilibrium Price and Quantity are determined by
supply and demand. Whenever price changes,
supply changes, or both change, equilibrium price
and quantity change.
PRICES OF BASIC COMMODITIES
COMMODITIES - are raw materials or
primary agricultural products that can
be bought and sold in the market like
corn, wheat, copper, crude oil, etc.
BASIC CONSUMER GOODS IN THE PHILIPPINES
A. Oil products (gasoline, diesel, LPG )
B. Processed and Manufactured Commodities
1. Canned Goods 8. Meat and Poultry
2. Processed Milk 9. Basic Medicines
3. Instant Noodles
4. Bread
5. Commercial Rice
6. Sugar
7. Cooking Oil
What Causes Commodities Price to Change?
1. When supply exceeds demand price fall and when
demand is greater than supply price rise.
a. When people's income increases, their
purchasing power increase and result to greater
demand for commodities to make their life
comfortable.
b. Demand for crude oil and gasoline increasesas
more people buy automobiles, demand for gold
increases because of greater demand for jewelries,
and greater demand for commercial rice, meat,
poultry products, sugar, and coffee, among others.
c. Changes in technology and decrease in
production costs, output increases. With the increase
in supply of goods, the company needs to decrease
their price to sell their surplus.
2. Natural disasters can also cause prices to change.
3. Production costs can also cause price to rise or
fall like implementation of Salary Standardization
Law and Minimum Wage Law, and the shifting
production from human to technology.
ADVANTAGES OF RISING AND FALLING OF
PRICES OF COMMODITIES
1. Consumers will benefits from low prices in form of
cheaper gas or diesel, cheaper utilities and lower
inflation.
2.Consumer will benefits from low prices of goods
and services.
3. Industries like manufacturing, mining and trade will
benefits due to decrease in production cost.
4. Producer's profit will increase due to the increase
in the prices of their output.
5. Government income in the form of taxation will
increase due to increase in business and
employment opportunities from both private and
public sectors.
DISADVANTAGES OF RISING AND FALLING OF
PRICES OF COMMODITIES
1. Falling oil prices will hurt the economies of oil
producing countries.
2. Low prices will discourage investors/ proucers to
invest/ produce.
3. Government will be affected by falling prices of oil
in the Middle East. OFW's remittances will decline
due to freeze hiring of outright layoffs.
4. Unemployment will increase and government
income will be affected when the OFW's working in
the oil producing countries return to their mother
country.
THINGS TO BE DONE TO STABILIZE PRICES OF
BASIC COMMODITIES
1. Maintain an adequate food stocks in the local, regional
and national levels.
2. More investments on the infrastructure projects that
promote irrigation in the local and regional levels.
3. Implementation of House Bill No. 24190 ( “An Act
Granting Stand-By Power of the President of the Phils
to control and stabilize prices of prime commodities
in times of shortage, emergency and/or calamity.
LABOR SUPPLY, POPULATION GROWTH AND
WAGES
Labor Force - the people who are willing and able to
work. ( 15 years old and over )
LABOR FORCE = Employed + Unemployed
The size of the labor force is used to determine the
unemployment rate. The percentage of the
unemployed is called the unemployment rate.
UNEMPLOYMENT RATE = (Unemployed/Labor
Force) ﹡100
- A person in unemployed if he or she is willing and
able to work, actively looking for job but no suitable
job available.
- People who are voluntarily idle or not actively
looking for a job are not classified as unemplyoed.
- Labor force participation is the percentage of the
total population over 15 years of age.
LABOR FORCE PARTICIPATION RATE = ( Labor
Force/Civilian Non-Institutionalized Population )﹡100
Civilian Non-Institutionalized Population -
everyone living in the Phils. who is 25 or older
except inmates of institutions suchas prisons,
home for the aged and mental hospitals.
Underemployment - is a situation where employed
persons express their desire to have an
additional hours of work in their present job,
to have additional job, or to have a new job with
longer working hours.
LABOR SUPPLY - is the number of hours people are
willing and able to supply at a given wage rate. It is
the numbee of workers willing and able to work in a
particular job or industry for a given wage. It is simply
means that as wage increases, workers are usually
attracted to work for more hours.
EMPLOYMENT SECTORS IN THE PHILIPPINES
1. Agricultural Sector
2. Industrial Sector
3. Services Sector
CATEGORIES OF WORKERS
1. Wage and Salary - those who work for private
households, private establishment, government or
govt. owned or controlled corporations, and those who
work with pay in own family-operated farm or
business.
2. Self-employed workers without any paid
employee - works for himself/herself instead of
working for an employer.s
3. Employers in own family-farm or business.
4. Unpaid family workers - individual who work for
his family business without pay.
CLASSIFICATION OF WORKERS
1. Full-time workers - workers who work for 40
hours or more in a week.
2. Part-time workers - work for less than 40 hours
a week.
FACTORS THAT MAY CHANGE THE LABOR
SUPPLY
1. Substitution effect - When wage rate
increases, leisure becomes more expensive than the
other goods that workers might purchase. Higher
wage rate would lead workers to work more hours
because high price of leisrue makes leisure less
attractive
2. Income effect - the income effect of higher
wages would lead more workers to work less, while
thoe receiving lower wages would lead more workers
to work more. But with lowe wages, it reduce the
income of workers that would lead them to look for
additional income to maintain the family's standard of
living.
LABOR DEMAND - refers to the number of hours
that an employer is willing to pay based on current
market price of labor.
LABOR DEMAND IN METRO MANILA
MONTHLY SALARY (Php) QUANTITY OF LABOR
DEMANDED
10,000.00 500
15,000.00 400
20,000.00 300
25,000.00 200
30,000.00 100
FACTORS THAT MAY CHANGE LABOR DEMAND
1. Increase in demand for goods and services.
2. During the recission, the demand for labor
decreases when the company needs to decrease
their production costs.
3. Changes in technology will change the demand for
labor for workers with technical know-how.
LABOR SURPLUS - is an economic condition in
which the supply of labor is greater than the demand
for labor.
LABOR SHORTAGE - is an economic condition in
which supply of labor is less than the demand for
labor.
WHAT CAN BE DONE TO REDUCE SURPLUS
OF WORKERS
1. Encourage early retirement by offering an early
retirement package or incentives depending upon the
agreement between the employer and the employee.
2. Freeze hiring. Proper alignmrnt of workers for
them to be effet and effective.
WHAT CAN BE DONE TO OVERCOME SHORTAGE
OF WORKERS
1. Recruitment of new workers.
2. Offer promotion package for deserving workers.
3. Establish a new program innovation.
4. Look for substitute workers during peak season
POLPULATION GROWTH
- Increase in the number of people living in a
country, province or city.
TYPES OF MARKET
1. Resource Market - place where business
purchase all the resources needed in producing
goods and services.
2. Product market - place where consumers,
businesses, and the public sector purchase finished
goods and services.
3. Labor Market - place where workers ans
employers interact with each other.
POSITIVE EFFECTS OF POPULATION GROWTH
1. Increase in labor market
2. Increase in demand for goods and services
3. Price stability
NEGATIVE EFFECTS OF POPULATION GROWTH
1. Poverty and inequality
2. Economic growth
3. Education
4. Unemployment
5. Rural-urban migration
6. High Cost of Living
7. Social Problems
WAGE - is a monetary remuneration computed on
hourly, daily, weekly, or piece of work basis paid by
an employer to an employee in exchange for work
done.
Wage and Wage-related Benefits Given to
Workers
1. MINIMUM WAGE - the minimum wage rates
applicable per region, province and industry sector
( Wage Rationalization Act - RA no. 6727
2. Holiday Pay
3. Overtime Pay
4. Vacation Leave
5. Parental Leaves
Three Types
1.Maternity Leave
2. Paternity Leave
3. Solo-Parent leave
6. 13th Month Pay
7. Separation Pay
AUTHORIZED CAUSES OF TERMINATION OF
EMPLOYEES
1. Installation of labor-saving device
2. Redundancy
3. Retrenchment to prevent losses
4. Closure of cessation of operation
5. Disease
JUST CAUSES OF TERMINATION OF
EMPLOYEES:
1. Serious miscounduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work.
2. Gross and habitual neglect by the employee of his
duties.
3. Fraud or willful breach by the employee of the
trust reposed in him by his employer or any
immediate member of his family or his duly
authorized representative.
4. Commission of a crime or offense by the
employee against the person of his employer or any
immediate members of his family or his duly
authorized representatives.
Two most commonly used grounds for
termination of employee are the
Authorized Causes (article 283 -284) and
the Just Causes ( art 282 of the Labor
Code of the Philippines)
AUTHORIZED CAUSES
1. Installation of labor-saving device
2. Redundancy
3. Retrenchment to prevent losses
4. Closure of cessation of operation
5. Disease
JUST CAUSES OF TERMINATION OF EMPLOYEE
1. Serious misconduct or willful disobedience by the
emlpoyee of the lawful order of his employer or
representative in connection with his work.
2. Gross and habitual neglect by the employee of his
duties.
3. Fraud or willful breach by the employee of the
trust reposed in him by his employer or any
immediate member of his family or authorized
representative.
4. Commission of acrime or offense by the employee
against the person of the employer or any of the
immediate members of his family or his duly
representative.
WAGE DIFFERENTIAL - refers to the
difference in wages between workers
with different skills in the same industry
or localities or between workers with
the same skills in different industries of
localities. It may also differ in different
employment or occupations.
FACTORS THAT AFFECT WAGE DIFFEENTIAL
1. Govt. policy on Salary and Wage Adjustement
2. company policy on employees comensation
3. Collective bargaining agreement between
management and workers in the pricate Sector.
4. Collective negotiation agreement and workers in t
MINIMUM WAGE - is the lowest remuneration that
employers may legally pay to workers.
ADVANTAGES OF INCREASE IN MINIMUM WAGE
1. Increasing the minimum wage would mean
maintaining the standard of living of the wage
earners.
2. Increasing the MW would mean that people have
more money to spend for goods and services
3. MW earners will no longer quit from their job if
they will be given a raise in income.
4. Increase in MW would also help the govt. to
increase revenue from the tax collected from the
wage earners and businesses.
DISADVANTAGE OF MINIMUM WAGE INCREASE
1. Employers that will be affecred by a wage
increase would result to termination of some workers
to lessen the cost of labor.
2. Prices of goods and services will increase to cover
to cover the cost of paying higher wage to workers.
3. Employers may shift to outsourcing, which means
hiring from other company or agency to do the same
work instead of durect hiring.
4. Employers may not offer additional benefits or
incentives to workers due to wage increase.
LABOR MIGRATION AND OVERSEAS FILIPINO
WORKER (OFW) PHENOMENON
MIGRATION - refers to the movement of people from
one place to another.
DIFFERENT TYPES OF MIGRATION
a. Internal migration - movement of people within
one country
b. International Migration - movement of people from
one country to another.
CAUSES OF MIGRATION
1. Poverty 6. Better education
2. Unemployment 7. Better environment
3. Victims of calamities 6. Economic security
4. Civil wars
5. Improve standard of living
POSITIVE EFFECTS OF MIGRATION
1. Increase labor supply
2. Cheap Labor
NEGATIVE EFFECTS OF MIGRATION
1. Overcrowded
2. Lack of housing facilities
3. Increasing inequality in the distribution of income
and wealth
4. Heavy pollution like noise, air, water, sound etc.
5. Trafffic congestion
6. The occurrence of squatter areas and slums
7. Unemployment
LABOR MIGRATION - is the process of shifting a
labor froce from one physical location to another.
CAUSES OF LABOR MIGRATION
1. The desire of the job seekers to increase income
and to improve standard of living.
2. The emergence of new industries.
3. The relocation of the production facilities of a
given
business to a new area.
OVERSEAS FILIPINO WORKERS (OFW)
PHENOMENON
-
started after Martial Law,
