INTRODUCTION OF

ECONOMICS
Chapter 1

RYAN D. TAN
Economics Instructor
Have you ever had to make a
tradeoff in your life?
What about your parents?
What are you giving up to be here
right now?
Do you believe that you are part of
Economics?
 Economics
Economics is a social science that studies the human
behavior in consuming, producing and
distributing goods and services.
It recognizes that productive resources are limited,
and that all people's material wants cannot be
satisfied.
It seeks to find the most efficient utilization of
productive resources for the purpose of attaining
the maximum satisfaction of human material
wants.
 Models
A model is a simplified structure of the real
world which depends on various
generalizations and assumptions.
Models are used in descriptive economics to
formulate principles and in political economics
to propose policies.
 Ceteris Paribus
It is a common assumption which states that
nothing else changes.

In short – Everything is in BALANCED

 Descriptive Economics
The purpose of descriptive or positive economics
is to study what is.
Models are used to derive the theories, laws and
principles which can be observed in the
relationship between economic agents.
 Normative Economics
The purpose of normative or political (or policy)
economics is to study what should be.
Forecasts are made using models.
The predictions are then compared to commonly
accepted goals of our society (such as that of
full employment, economic freedom, equity)
on the basis of standards, values or norms
(such as a higher standard of living is
desirable).
 Economics in the Philippines
The economy of the Philippines is an anomaly in
the Asia-Pacific region in that it has lagged
behind other economies, such as those of
Singapore, South Korea, and Taiwan. From a
position as one of the wealthiest countries in
Asia after World War II, the Philippines is now
one of the poorest.
The economy has weathered global economic
and financial downturns better than its regional
peers due to minimal exposure to troubled
international securities, lower dependence on
exports, relatively resilient domestic
consumption, large remittances from four- to
five-million overseas Filipino workers, and a
rapidly expanding business process
outsourcing industry.
The current account balance had recorded
consecutive surpluses since 2003; international
reserves are at record highs; the banking
system is stable; and the stock market was
Asia's second best-performer in 2012. Efforts
to improve tax administration and expenditure
management have helped ease the Philippines'
tight fiscal situation and reduce high debt
levels.
Basic Economic
Problems
Basic Economic Goals
What do you think is the
purpose of goals in your
life?
 Between the tricycle
driver and jeepney driver
who do you think is more
goal-oriented?
 Balance
of
Trade

Basic Price
Equitable
Distribution Economic Stability
Goals

Full
Employment