Applied Economics 1st Quarter Activity Review

​ACTIVITY REVIEW FOR

APPLIED ECONOMICS

Opportunity Cost

The opportunity cost is time spent studying and that money to spend on something else. A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment).

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Non Price Determinants of Supply

There are four non-price factors of supply that can influence the willingness of suppliers to produce goods.

*The cost of production

*Expected future prices

*Number of suppliers and

*Technology

Sunk cost, in economics and finance, is a cost that has already been incurred and that cannot be recovered. In economic decision-making, sunk costs are treated as outdated and are not considered when deciding whether to continue an investment project.

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In economic terms, sunk costs are costs that have already been incurred and cannot be recovered.

Sunk Cost

Non-Price Determinants of Demand

What are Non-Price Determinants of Demand? Non-price determinants of demand refer to factors other than the current price that can potentially influence the need for a service or product, resulting in a shift in its demand curve.

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​Some of the non-price determinants of Demand

*Consumer income​

*Consumer tastes, preferences, and fashions​

*Population​

*Future expectation​

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Multiple Choice

Advertising expenditure. If you advertise a new product, that money is gone and cannot be retrieved.

• Opportunity Cost

• Production Cost

• Business Cost

• Sunk Cost

Multiple Choice

Non-price determinants are changes other than price that can lead to a change in demand. Non-price determinants include income, consumer expectations, population, demographics, and consumer tastes and advertising.

• True

• False

What is Normative Economics?

Normative economics is a school of thought which believes that economics as a subject should pass value statements, judgments, and opinions on economic policies, statements, and projects. It evaluates situations and outcomes of economic behavior as morally good or bad.

Positive Economics

The term positive economics refers to the objective analysis in the study of economics. Most economists look at what has happened and what is currently happening in a given economy to form their basis of predictions for the future. This investigative process is positive economics.

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Multiple Choice

The statements that express an opinion or judgment. They cannot be proven and do not contain facts. Often the words 'ought,' and 'should' are found in these types of statements.

• Positive Economics

• Normative Economics

• Micro Economics

• Macro Economics

GROSS NATIONAL PRODUCT (GNP)

GNP= C + I + G + (X – M)”

“It calculates the output of a country's residents wherever the location of the actual underlying business’ activity. Gross National Product (GNP) measures the total income that is earned by a country’s factor of production in producing goods and providing services by a country's residents and businesses. It is equal Gross Domestic Product (GDP) plus income earned from assets abroad less the income paid to foreign assets operating domestically.”

Gross Domestic Product

GDP= C + I + G + (X – M)

In determining GDP using the expenditure approach, we have to summarize the total amount spent on goods and services produced in a country by every household, firm, government, and foreigner.

Multiple Choice

What will be the GNP of a country if the household and individual consumption are (Php 10), investment is (20), government expenditure (30), export is (60), and import is 80)?

• Php 80

• Php 60

• Php 30

• Php 110

​Price Elasticity of Demand and Supply

The price elasticity of demand is the percentage change in the quantity demanded of a good or service divided by the percentage change in the price. The price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.

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Price Elasticity of Supply

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​The price elasticity of supply (PES) is measured by the % change in Q.S divided by the % change in price.

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Multiple Choice

Economists use price elasticity to explain how supply or demand changes and understand the workings of the real economy, despite price changes.

• TRUE

• FALSE

Multiple Choice

If the price of milk increases by 10%, and the supply increases by 20%. We say the PES is 2.0, and it is said to be _______?

• Elastic

• Inelastic

• Unitary Elastic

• Perfectly Elastic

Multiple Choice

If the price of bananas falls 12% and the quantity supplied falls 2%. We say the PES = 2/12 = 0.16, and it is ______.

• Elastic

• Inelastic

• Perfectly Elastic

• Perfectly Inelastic

Multiple Choice

The price elasticity of demand is an economic indicator of the increase in the number of commodities demanded or consumes about its price change.

• TRUE

• FALSE

Multiple Choice

It is a social science concerned with the efficient allocation of scarce resources that have alternative uses to achieve the maximum satisfaction of individuals' unlimited needs and wants.

• Economics

• Social Science

• Applied Economics

• Applied Science

Multiple Choice

It deals with the production and consumption of goods and services.

• Economics

• Social Science

• Economics as Social Science

• Economics as Applied Science

Multiple Choice

It is the application of economic theories and models in real life.

• Economics as Social Science

• Economics as Applied Science

• Applied Economics

• Scarcity

​THANK YOU!

​See you again!

Dexter N. Magno​

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