Resource Utilization and

Economics

Elissa Marie G. Macamay

ECONOMICS
• Efficient allocation of the scarce means of production toward
satisfaction of human needs and wants
• Came from the Greek words :”OIKOS” (household) and “NOMUS”
(system or management)
• “OIKONOMIA” “OIKONOMUS” therefore means the management of
household
SCARCITY
• Limited Of Resources
• The limited availability of economic resources or relative to man’s or
society’s unlimited demand for goods and services.
• The basic and central economic problem confronting every man and
society.
Factors of Production
• Land- The soil or the ground surface together with all the natural resources;
the compensation for use of land called rent.
• Labor- Any form of human effort exerted in the production of goods and
services. The compensation for labor rendered is called salary (annual or
monthly basis) or wage ( Hourly or Daily Compensation)
• Capital- Man- made goods used in production of other goods and services.
• Entrepreneurship- The person who manages all the factors of production.
This Photo by Unknown Author is licensed under CC BY-SA-NC
CIRCULAR FLOW MODEL
• Resource Market - The place where resources or services of resource
supplier are bought and sold.
• Product Market - The place where goods and services produced by
businesses are bought by and sold to the households.
• Business - Buys resources and sell the products.
• Household - Buys product and sell resources.
OPPORTUNITY COST
• Refers to the foregone value of the next best alternative.
• Expressed in relative price. This means that the price of one item
should be relative to the price of another.
BASIC DECISION PROBLEMS
• Consumption – The society decides the goods and service they
want to consume and utilize.
• Production – The producers determine the consumer’s demands
and decides how to allocate resources to meet them.
• Distribution – Proper allocation of allocation of all the resources
for the benefit of the whole society.
• Growth Over Time – All problems of choice have to be seen in the
context of future events.
FOUR BASIC ECONOMIC
QUESTIONS
• What to produce
• How to produce
• How much to produce
• For whom to produce
 3E’s in ECONOMICS
• Efficiency – Refers to productivity and power
allocation of economic resources.
• Effectiveness – Attainment of goals and objectives.
• Equity – Justice and fairness.
POSITIVE AND NORMATIVE
ECONOMICS
• Positive Economics – An economic analysis that
considers economic conditions “as they are” or “ as
it is”
• Normative Economics – An economic analysis which
judges economic conditions “as it should be”
CETERIS PARIBUS
ASSUMPTION
• All things are held constant or else equal.”
• Used as device to analyze the relationship
between two variables while the other factors
are held unchanged.
BRANCHES OF ECONOMICS
• Micro Economics – Individual decisions, focuses on
two main players- the buyer and seller.
• Macro Economics – It seeks to understand the
behavior of the economy as a whole.
 TYPES OF ECONOMIC
SYSTEM
• Traditional Economy – Basically a subsistence
• Command Economy - Production is dictated by the
government.
• Market Economy – Resources are privately owned.
• Socialism – Owned by the state.
• Mixed Economy – Mixture of market and command.
IMPORTANT ECONOMIC TERMS

• Wealth – Anything that has functional value

• Consumption – Usage of the available goods and services by the
buyer or consumer.
• Production – Creation of firms by an output.
• Exchange – Process of trading or buying and selling goods or
services for money.
• Distribution – Process of allocating or apportioning scarce
resources to be utilized.
Thank you