4. TENDENCY OF AN INDIVIDUAL TO IMITATE THE ACTIONS/ MANNERISMS OF OTHER INDIVIDUALS FOR WHOM HE HAS CERTAIN REGARD
DEMONSTRATION EFFECT IN ADVERTISEMENT (INCREASE PATRONIZATION FROM CONSUMERS = INCREASE PROFIT)

6. EXPENSES SPENT? = FOOD OR NON-FOOD (CLOTHES, CARS, HOUSES, LUXURIES)
INCREASE IN INCOME
EXPENSES SPENT? = FOOD OR NON-FOOD (CLOTHES, CARS, HOUSES, LUXURIES)

7. AS INCOME INCREASES = EXPENSES ON FOOD DECREASES (OR REMAINS CONSTANT)
AS INCOME INCREASES = EXPENSES ON NON-FOOD INCREASES
ENGEL’S LAW (ERNST ENGEL)

9. 2 ANALYSIS/ METHODS IN ECONOMICS
POSITIVE ECONOMICS
Objective (it only tells what is: results)
Descriptive & illustrative (how things work)
Not concerned with right or wrong
NORMATIVE ECONOMICS
Subjective (value-laden)
What ought to be (prescriptive/ policy-oriented)
Concerned with right or wrong

12. POSITIVE ECONOMICS

15. BRANCHES IN ECONOMICS: MACROECONOMICS & MICROECONOMICS
MACROECONOMICS: DEALS WITH THE WHOLE AGGREGATES (EACH INDIVIDUAL UNIT: HOUSEHOLD, GOVERNMENT, CORPORATION)
MICROECONOMICS: DEALS WITH A SINGLE AGGREGATE

16. SERVICES: INTANGIBLE (NON-CONSUMABLE) GOODS: TANGIBLE (CONSUMABLE)

17. CLASSIFICATION OF GOODS ACCORDING TO USE
CONSUMER GOODS
Ready for consumption
CAPITAL GOODS
Used in the furtherance of production

19. CLASSIFICATION OF GOODS ACCORDING TO NEEDS/ WANTS
ESSENTIAL GOODS
GOODS THAT ONE CAN’T LIVE WITHOUT (NECESSARY)
LUXURY GOODS
MAN CAN LIVE WITHOUT THESE (NOT NECESSARY)
GIVES COMFORT AND PLEASURE

21. CLASSIFICATION OF GOODS ACCORDING ACCORDING TO ACCESSIBILITY
ECONOMIC GOODS
HAVE VALUES & PRICE ATTACHED TO IT
FREE GOODS
NEED NO PAYMENT

23. WHAT IS TRUE IN MICROECONOMICS MAY NOT BE TRUE IN MACROECONOMICS?
FARMER/OWNER (CORPORATION) GETS GOOD HARVEST = PROFIT
ALL FARMERS HAVE GOOD HARVEST?
SURPLUS OF SUPPLY = PRICE?

24. TYPES OF ECONOMIC SYSTEM
TRADITIONAL ECONOMY
COMMAND ECONOMY
FREE MARKET ECONOMY
MIXED ECONOMY

25. PRODUCTION FOR OWN CONSUMPTION
TRADITIONAL ECONOMY
“SURVIVAL” ECONOMY
PRODUCTION FOR OWN CONSUMPTION
METHOD OF PRODUCTION: BASED ON TRADITIONS

29. FREE MARKET ECONOMY
INVISIBLE HAND: PRODUCTIVITY DEPENDS ON THE GOOD RELATIONSHIP BETWEEN CONSUMERS AND PRODUCERS
LAISSEZ-FAIRE

36. MAKING DECISIONS ON ECONOMIC PROBLEMS:
WHAT TO PRODUCE?
HOW TO PRODUCE?
HOW MUCH TO PRODUCE?
SCARCITY
FOR WHOM SHALL GOODS AND SERVICES BE PRODUCED?

38. 4) CONSUMPTION (UTILIZATION) 2) DISTRIBUTION (ALLOCATION)
3) EXCHANGE (MONEY)
4) CONSUMPTION (UTILIZATION)
2) DISTRIBUTION (ALLOCATION)
1)PRODUCTION (CREATION OF GOODS)
DIVISIONS OF ECONOMICS
5) PUBLIC FINANCE (ACTIVITIES OF THE GOV’T ON TAXES & EXPENDITURES)

39. FINISHED MAN-MADE PRODUCT THAT CAN PRODUCE OTHER GOODS
ORGANIZER (OWNER) OF ALL FACTORS OF PRODUCTION
HUMAN RESOURCES: TRANSFORMING RESOURCES INTO ANOTHER PRODUCT
NECESSARY FOR UNDERDEVELOPED COUNTRIES THAT CANNOT PRODUCE HIGH-END EQUIPMENTS
FOREIGN EXCHANGE
DOLAR RESERVES TO ACQUIRE EQUIPMENTS: INCREASE IN PRODUCTION
NOT CREATED BY MAN

42. WHAT COMBINATION OF GOODS AND SERVICES CAN BE PRODUCED EFFICIENTLY?
FRONTIER?
EDGE/ LIMIT
POINT AT WHICH AN ECONOMY IS EFFICIENTLY PRODUCING ITS GOOD AND SERVICES
WHAT COMBINATION OF GOODS AND SERVICES CAN BE PRODUCED EFFICIENTLY?
EFFICIENCY = IF PRODUCT A IS INCREASING THEN PRODUCT B HAS TO DECREASED
ANSWERS 3 BASIC ECONOMIC PROBLEMS: WHAT, HOW, WHOM