1. Applied Economics Lesson 2 (Chapter 1)
Economic Categories
Applied Economics Lesson 2 (Chapter 1)
Presented by: MS. RICA B. OLIVAR

2. Objectives:
Define the concept underlying Ceteris Paribus and economic theory
Categorize economics as a discipline
Application of Sunk Cost: Calculating Overtime Pay in the Philippines
Recognize the importance of economic indicators
Compute GNP and GDP

3. Cost-Benefit Analysis- Case 1
Group yourselves with 5-6 members.
Each member will expound the alternative option provided in the case using the cost- benefit analysis.
As a conclusion, the group will choose the best decision out from the given case.
Content Criteria:
Relevance – 10 pts Feasibility – 5 pts
Interpretation- 5 pts Relevance- 5 pts
Organization of Ideas- 5 pts PTS
20 PTS
Format: Arial line spacing – justify – normal margin

4. Cost-Benefit Analysis

5. Economic Problems in the Philippines

6. Economic Theory/Model
WE ARE THEORIST !
Economic Theory/Model
Simplification of economic reality used to make predictions about the real world

8. Situation: Meet Wilson
170 pounds, loves eating regular ice cream

9. “All other things constant” “Nothing else changes”

10. “Economy must focus on what should work rather than how does it work…”

11. Normative Economics- Reflects someone’s opinion
Normative Vs. Positive
Normative Economics- Reflects someone’s opinion
Positive Economics-
Talks on economic reality that can be supported/ rejected by reference to the facts

12. 1. The unemployment rate in the Philippines should be lower.
2. The unemployment rate in the Philippines on January 2016 was 5.8 percent.
MONICA

13. Normative or Positive?

14. If price goes down, demand will increase.

15. Government intervention in railroading has had a devastating impact seeing costs have increased, profits have usually been low, and labor trouble is endemic.

16. Government intervention must strictly limited as government intervention tends to cause an inefficient allocation of resources.

17. Tax on the tax payer shifts the demand curve to the left, symbolizing a reduction in demand for a product.

18. Federal income taxes should be cut because the income tax burden many tax payers.
Charles

19. Can problems be discussed in both a positive and a normative economics framework?

20. Macroeconomics & Microeconomics

21. Macroeconomics Microeconomics
Deals with human behavior and choices as they relate to an entire economy
Deals with human behavior and choices as they relate to a relatively small units: an individual, a firm, an industry, a single market
Candelaria

22. Macroeconomics or Microeconomics?

23. Can government policy affect business behavior?

24. How does a market work?

25. What causes an inflation?

26. Why do some economies grow faster than the others?

27. How does government spending affect the economy?

28. Market Participants

29. Market Participants: Households
*Consumers: demand goods and services produced
*Resource Owners: supply the resources used to produce goods and services

30. Businesses (Firms, Governments and the rest of the world)
Demand the resources to supply the households with goods and services demanded

31. Circular-Flow Model

33. Sunk Cost
A cost you have already paid and cannot recover, regardless of what you do now.

34. Application of Sunk Cost: Overtime Cost

35. OR = Hourly Rate x Overtime Premium
Ordinary day Overtime
On an ordinary day, the overtime rate per hour is determined as follows:  Let say the employee hourly rate is Php 57.00/hour, then the overtime rate per hr is Php 71.25
Special Holiday Overtime
Let say the employee hourly rate is Php 57.00/hour To determine the overtime rate per hour:
Overtime rate/hour= Php 96.33

36. OR = Hourly Rate x Overtime Premium
On Regular Holiday Overtime Let say the employee hourly rate is Php 57.00/hour To determine the overtime rate per hour: Overtime rate/hour = Php
On Double Holiday Overtime
Let say the employee hourly rate is Php 57.00/hour To determine the overtime rate per hour:
Overtime rate/hour = Php

37. OR = Hourly Rate x Overtime Premium
Ordinary day Overtime : OP = 1.25 On Regular Holiday Overtime: OP = 2.6
Special Holiday Overtime: OP= 1.69
On Double Holiday Overtime OP= 3.9
TOR = Hourly Rate x Overtime Premium x No. of hrs.

38. Let’s Practice!

39. Marcus has a regular wage rate of Php 42. 00 per hour
Marcus has a regular wage rate of Php per hour. For 2 consecutive special holidays, he worked additional 10 hrs for each day . How much is his total overtime rate for those days?
Php
HR= Php 42 , OP= 1.69 (special holiday), HRS Overtime= 20 hrs, TOR= Php

40. Sharia has a regular wage rate of Php 48. 00 per hour
Sharia has a regular wage rate of Php per hour. She earned a total overtime rate of Php for working on a double holiday. How many hours did she worked?
5 hrs
HR= Php 48 , OP= 3.9 (On double holiday), HRS Overtime= 5hrs, TOR= Php

41. Maria earned a total overtime rate of Php 1 474
Maria earned a total overtime rate of Php for working on 9 hrs straight during regular holiday. How much is her hourly rate?
Php 63.00
HR= Php 63 , OP= 2.6 (Regular holiday), HRS Overtime= 9hrs, TOR= Php
(St. Tomas)

42. Peter with Php 500 hourly rate earned a total overtime rate of Php for working on 7 hrs overtime. What is his overtime premium? How will you categorized that day?
HR= Php 500 , OP= 1.25 (Ordinary Day), HRS Overtime= 7 hrs, TOR= Php
1.25 (Ordinary Day)

46. Calculating GNP/GNI

47. Calculating GNP
GNP = GDP + Net Factor Income (Net income inflow from abroad – Net income outflow to foreign countries)
Net Factor Income
Difference between the factor income earned from abroad by normal residents of a country and the factor income earned by non-residents (foreigners) in the domestic territory of that country.

48. In what way can they gave positive output in country’s economy?

49. Let’s practice!

50. Compute the GNP of the Philippines with a GDP of Php 400M in , with an attributes of net income from American employees of Php 100M in the country and Php 250M net income of Filipinos working in America.
GNP= GDP+ Net Factor Income = Php 400 million + (Php 250 million + (-Php 100 million) )
GNP= Php 550 million
GNP= Php 550 million

51. Net income outflow to foreign countries= 70 million
A country possess a yearly gross national product of 340 million. Part of it includes a gross domestic product of 330 million and an income inflow of 80 million. How much is the country’s net income outflow?
Net income outflow to foreign countries= 70 million
GNP= GDP+ Net Factor Income(Net income inflow from abroad – Net income outflow to foreign countries) 340 million = 330 million + ( 80 million + (-70 million) ) (CANDELARIA)

52. Net income inflow to foreign countries= 39billion
Australia earned a yearly gross national product of 499 billion, gross domestic product of 470 billion and an income outflow of 10 billion. How much is the country’s net income inflow?
Net income inflow to foreign countries= 39billion
GNP= GDP+ Net Factor Income(Net income inflow from abroad – Net income outflow to foreign countries) 499 billion = 470 billion + ( 39 billion + (-10 billion) )

53. Calculating GDP

54. Approaches in Calculating GDP
1. Expenditure Approach
GDP= C + G + I + (X - M)
GDP = C + G + I + (X - M)
GDP = $304 + $156 + $124 + $18
GDP = $602

55. Approaches in Calculating GDP
2. Income Approach
GDP = NI + Indirect Business Taxes + Depreciation
NI = W + R + i + PR
GDP = $492 + $74 + $36
GDP = $602
NI = $67 + $75 + $150 + $200
NI = $492

56. Chapter Test next meeting:
Prepare a ¼ index card for Overtime Premium Rates, GDP and GNP formula
NO SHARING OF FORMULA CARD

57. End of Chapter 1