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    BMGT 21 Chapter 1

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    Escalo Lovely Mhay M.
    The document discusses key concepts in economics including the definition of economics as dealing with scarce resource allocation, divisions of microeconomics and macroeconomics, the circular flow model, and basic economic problems. It also covers classifications of goods, resources, and economic systems as well as factors considered in individual decision making and how those decisions can impact others.

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    BMGT 21 Chapter 1

    Uploaded by

    Escalo Lovely Mhay M.
    19 views11 pages
    The document discusses key concepts in economics including the definition of economics as dealing with scarce resource allocation, divisions of microeconomics and macroeconomics, the circular flow model, and basic economic problems. It also covers classifications of goods, resources, and economic systems as well as factors considered in individual decision making and how those decisions can impact others.

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    BMGT-21-Chapter-1

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    The document discusses key concepts in economics including the definition of economics as dealing with scarce resource allocation, divisions of microeconomics and macroeconomics, the circular flow model, and basic economic problems. It also covers classifications of goods, resources, and economic systems as well as factors considered in individual decision making and how those decisions can impact others.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    19 views11 pages

    BMGT 21 Chapter 1

    Uploaded by

    Escalo Lovely Mhay M.
    The document discusses key concepts in economics including the definition of economics as dealing with scarce resource allocation, divisions of microeconomics and macroeconomics, the circular flow model, and basic economic problems. It also covers classifications of goods, resources, and economic systems as well as factors considered in individual decision making and how those decisions can impact others.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 11

    Cavite State University – CCAT Campus

    Department of Management Studies

    Bachelor of Science in Business Management

    Chapter 1:
    Revisiting Economic
    Approaches and Principles

    Prepared by:

    Mr. Richard P. Perez


    ECONOMICS
    - Is a social science which deals with the proper allocation and efficient
    use of scarce resources for the maximum satisfaction of human wants
    (Fajardo, 1990)
    • Economy – “oikonomus” or oikonomia
    (Greek)
    “One who manages a household”
    Scarcity - limited nature of society’s
    resources
    Divisions of Economics:
    1. Microeconomics = Deals w/ the problems and
    analysis of behavior of individual economic
    unit such as the consumer (household), seller
    (firm), and owners of factors of production
    2. Macroeconomics = Deals w/ the problem of
    the whole economy and how aggregated
    economic units or sectors such as consumer,
    business, government and foreign sectors are
    interrelated
    Human Wants
    - are the goods and services needed by human
    beings.
    Goods and Services
    - are those that yield satisfaction (tangible and
    intangible)
    Classification of Goods
    1. Consumer Goods – Those that yield direct
    satisfaction
    2. Capital Goods – Those that are used in the
    production of other goods (and services)
    3. Essential Goods – These are the “basic” needs of
    man
    4. Luxury Goods – These are those that contribute to
    mans comfort and wellbeing
    Resources
    Refer to the factors or inputs of production.
    They are those which are needed to produce
    goods and services.

    Classification of resources:
    1. Land – natural resources, not man-made.
    2. Labor – physical and mental
    3. Capital –anything that is used to produce other
    goods and services.
    4. Entrepreneurship- ability to organize and
    coordinate land, labor and capital
    Basic Economic Problems:
    1. What goods and services to
    produce?

    2. How to produce the goods


    and services and how
    much?

    3. From whom are these


    goods and services?
    Models of Economic System:
    1. Capitalism/Market economy – It refers to the
    free enterprise or laissez faire economy
    2. Communism/Command economy –This is the
    opposite of capitalism wherein the government
    controls the economy
    3. Socialism – It s a mixture of capitalism and
    communism.
    Factors in decision making
    1. People face tradeoffs.
    2. Opportunity cost.
    3. Making decisions at the margin.
    4. People respond to incentives.
    How individual decisions affect others
    5. Trade (exchange) can benefit everyone.
    6. Markets are often a good way to organize exchange.
    7. Government can sometimes improve on markets.
    The Circular Flow/Economic Model
    Product Markets
    resource payments such as wages, rents, interest & profit

    Land, Labor, Capital, Entrepreneurship

    Households Business
    Consumers Firms

    Goods & Services

    Consumption and Expenditures

    Resource or Factor Markets


    MICROECONOMIC AGENTS
    Firms
    – Produce and sell goods and services
    – Buy inputs (labor, capital & raw materials)
    Consumers/ Households
    – Buy goods and services
    – Sell inputs (labor services, loanable funds)

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