Francis Benson C.

Hugo

Course Description
The objective of this course is to provide a basic
comprehension of the complexities of economics in the
international, national, regional and household settings.
The subject covers the basic economic principles in
efficiently analyzing ones own economic problems and
follow intelligently the economic issues of the day.

Course Methodology
Assigned

readings for each session shall be

supplemented by lectures. Both the readings and
lectures shall in turn be amplified in the class
discussions.
Specific questions and problem areas of students are
expected to be discussed during the open forum.
The burning economic issues of the week whether
related to the topic for the day or not shall likewise be
discussed towards the end of the class.

Course Outline
Session 1
Introduction to course, Administrative requirements, etc.
Sessions 2 to 5
Basic Economic Concepts: Defining Economics and its Nuances
The Market Mechanism: Demand and Supply; and, Market
Equilibrium
Sessions 6 to 8
A Framework of How the Economy Works;
Macroeconomic Instruments and Objectives;
National Output, Unemployment and Inflation
Aggregate Supply and Demand
Sessions 9 to 13
Monetary Policy
Fiscal Policy

Course Text and References

Required Text:
Gordon, Sanford D. and Stafford, Allan D., Applying
Economic Principles, Glencoe/McGraw-Hill, Westerville,
Ohio, 1994
Reference Text:
Billings, Henry F., Introduction to Economics, EMC
Publishing, Minnesota, USA, 1991
Alternate Text
Case, Karl E. and Fair, Ray C., Principles of Economics. 10th
Edition, Pearson Education, Inc., Jurong Singapore, 2012
McConnell, Flynn, Brue, Grant, Microeconomics, Mc-Graw
Hill, Inc., Philippines, 2012

The Scope and Method of

Economics

Why Study Economics

To learn a way of thinking
To understand society
To understand global affairs

To be an informed citizen

To
learn
a
way
of
thinking
3 Fundamental Concepts
Opportunity Cost

1.

Wants and Means

Productive resources (scarce)
Limits, Alternatives, and Choices

- the best alternative that we forgo, or give up, when we make a

choice or a decision

Economics the study of how individuals and

societies choose to use the scarce resources that
nature and previous generations have provided.

3 Fundamental
Concepts
2.
Marginalism (extra, additional)
3 Fundamental Concepts

Opportunity Cost

1.

The process of analyzing the additional or incremental costs or

benefits arising from a choice or decision

E.g., residence Pinagbuhatan

school Caniogan
visit relative Rosario
Other ex.: Should you attend school for another year?
Should you study an extra hour for an exam?
Should you upsize your fries?
Should you buy an android or IOS phone?
Should a business expand or reduce its output?
Benefits: Increased Utility (Pleasure, Happiness, Satisfaction)
Sunk costs costs that cannot be avoided because they have already
been incurred
E.g., Airplane with empty seats
marginal cost of extra passenger
few seats to be sold at big discounts
-

1.

3 Fundamental Concepts
s
1.
2.

3.

Opportunity Cost
Marginal

Efficient Markets
- A market in which profit opportunities are eliminated almost
instantaneously

- there is no free lunch

E.g.: hot tip in the stock market
- someone has to be first to get the news
- some people have quicker insights than others
- news travels fast

To understand society
Past and present economic decisions
Current state of physical environment

Buildings, roads

Character of society or level of material well-being

18th-19th century: Industrial revolution

Increased productivity of agriculture

New manufacturing technologies
More efficient forms of transportation

Late 90s: e revolution

The way we:

buy and sell products, get news, plan vacations, communicate with
each other, teach and take classes, etc.

Nature and number of jobs

- Facebook, YouTube, Yahoo!, Microsoft, Google, Monster.com,

Amazon.com

To understand global affairs

Indonesia, worlds top nickel producer from mines, started

a ban on unprocessed ore exports in January.

Affected Chinas nickel supply (used in stainless steel)
Opportunity for Philippines to increase raw ore shipments
to China
Economic considerations affect international relations in a
relatively open, market-oriented world.

To be an informed citizen
Government budget and support for PPP
New Centennial Water Source Kaliwa Dam Project
Implementing agency: MWSS

The NCWS Project aims to increase Metro Manilas raw water supply, (i) to meet future potable
water demand and (ii) as a redundant water source thereby reducing the dependence on the
Angat Dam Reservoir. In the short and medium-run, the main purpose of the Project is to ensure
water security.

To be an informed citizen
Operation & Maintenance of LRT Line 2
Implementing Agency: DOTC
The LRT Line 2 Operation and Maintenance Project will infuse private sector
efficiencies into the operations of the LRT Line 2 to provide better service levels
to the riding public.

To be an informed citizen
Why do the government fund for these instead of

other activities?
Is this a good idea?

The scope of economics

Microeconomics deals with the functioning of individual
industries and the behavior of individual economic decision-making
units: firms and households
- output of single firm or industry
- consumption patterns of a single or group of households

Macroeconomics branch of economics that economics that

examines the economic behavior of aggregates income, employment,
output, and so on on a national scale

Examples of Microeconomics and Macroeconomic Concerns

Division of
Economics

Production

Prices

Income

Employment

Microeconomics

Production/output
in individual
industries and
businesses
How much steel
How much office
space
How many cars

Prices of
individual goods
and services
Price of medical
care
Price of gasoline
Food prices
Apartment rents

Distribution of
income and wealth
Wages in the auto
industry
Minimum wage
Executive salaries
Poverty

Employment by
individual
businesses and
industries
Jobs in the steel
industry
Number of
employees in a
firm
Number of
accountants

Aggregate price
level
Consumer prices
Producer prices
Rate of inflation

National income
Total wages and
salaries
Total corporate
profits

Employment and
unemployment in
the economy
Total number of
jobs
Unemployment
rate

Macroeconomics National
production/output
Total industrial
output
Gross domestic
product
Growth of output