21 Nov 2018

What is a Manager?
- a person who directs (physical or human) resources to
achieve set goals.
Brief Review of a - The above definition includes all individuals who:
- (1) direct the efforts of others, including those who
Manager and delegate tasks within an organization such as firm,
family, or an organization (POSDICON);
Economics: Concepts, - (2) purchase inputs to be used in the production of
and Definition goods and services
- (3) are in charge of making other decisions

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What is Economics?
Economics
- A field of social science that deals with efficient and
effective allocation of limited resources such that
human wants will be satisfied.
- The only social science that is quantitative in nature
- A social science concerned with the generation,
distribution and consumption of goods and services
with the aim of maximizing the welfare of people
SOURCE: Case and Fair, 2015. Principles of Economics
Basic Questions of Economics?
 What goods and services to produce?
 How will such goods and services be produced?
 How much to produce?
 For whom to produce?
SOURCE: Case and Fair, 2015. Principles of Economics
21 Nov 2018
Branches of Economics?
 Microeconomics examines the behavior of individual
decision-making units—business firms and
households.
 Macroeconomics deals with the economy as a whole;
it examines the behavior of economic aggregates such
as aggregate income, consumption, investment, and
the overall level of prices.
SOURCE: Case and Fair, 2015. Principles of Economics
Basic Terms in Economics?
Opportunity Cost – the benefit of the next best
alternative which had been forgone or sacrificed due to
the decision made
Utility – refers to the level of satisfaction obtained while
consuming goods and services
Marginality – the additional output from additional input
used
Law of Diminishing Return – a law which states that
when one input is fixed and the other is variable, then
output or satisfaction at some point will decline then
becomes negative
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CIRCULAR FLOW DIAGRAM Components of Circular Flow?

1. HOUSEHOLDS
2. FIRMS
3. GOVERNMENT
4. MARKET FOR GOODS AND SERVICES
5. MARKET FOR FACTORS OF PRODUCTION
6. FINANCIAL MARKETS
7. REST OF THE WORLD

SOURCE: Case and Fair, 2015. Principles of Economics

FIRM
 Entities that employ
factors of production
(land, labor, capital
and technology) to
produce goods or
a social unit consisting of a person living alone or a group of persons
who sleep in the same housing unit and have a common
services for
arrangement in the preparation and consumption of food. consuming units.
HOUSEHOLD NB. Family and household are two different terms. Family is defined as a group of
Consuming units can
be the households,
persons usually living together and composed of the head and other persons related
to the head by blood, marriage or adoption. government, and
SOURCE: Philippine Statistics Authority among others.

GOVERNMENT FINANCIAL
 A group of people that governs a INTERMEDIARIES
community or unit. It sets and
administers public policy and
exercises executive, political and Entities where
sovereign power through customs,
institutions, and laws within a
trading of securities
state. A government can be including equities,
classified into many types-- bonds, currencies
democracy, republic, monarchy,
aristocracy, and dictatorship are and derivatives
just a few. occurs.
Source: business dictionary Source: Investopedia

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REST OF THE MARKET ARENAS IN THE ECONOMY

WORLD
 is used to represent
collectively all of the
other countries of
the world (or all
other countries for
which data are
available)
Source: dictionarycentral

MARKET ARENAS The Three Market Arenas

Households, firms, the government, and the rest
of the world all interact in three different market
arenas:
1. Goods-and-services market
2. Labor market
3. Money (financial) market
SOURCE: Case and Fair, 2015. Principles of Economics
• Households and the government
purchase goods and services (demand)
from firms in the goods-and services
market, and firms supply to the goods
and services market.
• In the labor market, firms and
government purchase (demand) labor
from households (supply).

The Three Market Arenas Financial Instruments

• In the money market—sometimes called
• Treasury bonds, notes, and bills are
the financial market—households promissory notes issued by the
purchase stocks and bonds from firms. government when it borrows
• Households supply funds to this market in the
expectation of earning income, and also money.
demand (borrow) funds from this market.
• Firms, government, and the rest of the world
• Corporate bonds are promissory
also engage in borrowing and lending, notes issued by corporations when
coordinated by financial institutions.
they borrow money.

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CIRCULAR FLOW DIAGRAM

Financial Instruments
• Shares of stock are financial instruments
that give to the holder a share in the
firm’s ownership and therefore the right
to share in the firm’s profits.
• Dividends are the portion of a corporation’s
profits that the firm pays out each period to
its shareholders.

MANAGERIAL ECONOMICS

WHAT IS MANAGERIAL
ECONOMICS???

MANAGERIAL ECONOMICS MANAGERIAL ECONOMICS

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MANAGERIAL ECONOMICS: Its MANAGERIAL ECONOMICS: Its

Relationship to Other Relationship to Other
Disciplines Disciplines

MANAGERIAL ECONOMICS: Its

MANAGERIAL ECONOMICS: Its
Relationship to Other
Relationship to Economic Theory
Disciplines
 Theory of Firm
 Theory of Consumer Behavior
 Production and Cost Theory
 Price Theory
 Market Structure

MANAGERIAL ECONOMICS: Its

Relationship to Business Function
 Production and Operations
 Marketing
 Finance and Accounting
 Human Resources