What is the purpose of theory?

(a)  

Example of theory in microeconomics

It is closely associated with the economic.

(a)  

It Is the central fact of every society.

(a)  

What are these? Land, labor, capital, and entrepreneurship

(a)  

What are economic resources used for?

(a)  

What solves the problem in microeconomics?

(a)  

refers to those goods and services and the quantity of each that the economy should produce

(a)  

How does price mechanism solves the “What to Produce?” problem in every economy?

(a)  

refers to the choice of the combination of factors and the particular technique to use in producing a good or service.

Since resources are limited in every economy, when more of them are used to produce some goods and services, less are available to produce others.

(a)  

How does price mechanism solves the “How to Produce?” problem in every economy?

(a)  

Refers to how the total output is to be divided among different consumers.

Since resources and thus goods and services are scarce in every economy, no society can satisfy all the wants of all its people.

(a)  

How does price mechanism solves the “For whom to Produce?” problem in every economy?

(a)  

Economic Systems Model (3)

(a)  

factors of production and distribution are owned and managed by private individuals or corporation.

(a)  

Characteristics: a. Private property b. Economic freedom c. Free competition d. Profit Motive

(a)  

factors of production and distribution are owned and manage by the state

(a)  

Characteristics of:

a. No private property b. No free competition c. No economic freedom d. No profit motive e. Presence of central planning

(a)  

combination of capitalism and communism -the major and strategic industries are owned and managed by the state while the minor industries belong to the private sector.

(a)  

studies the flow of goods and services from business firms to households, the composition of such a flow, and how the prices of goods and services in the flow are determined

(a)  

Studies the economic behavior of individual decisionmaking units such as consumers, resource owners, and business firms in a free-enterprise economy.

(a)  

It is he place or context in which buyers and sellers buy and sell goods, services, and resources.

(a)  

It shows the relationship between two or more variables.

(a)  

It refers to the market condition which once achieved, tends to persist. It results from the balancing of market forces (market demand and market supply).

(a)  

Equilibrium of individual firm in the economy viewed in isolation.

(a)  

simultaneous equilibrium of all the individual firms in the economy.

(a)  

A type of economics that deals with or studies what is, or how the economic problems facing a society are actually solved.

(a)  

deals with or studies what ought to be, or how the economic problems facing the society should be solved. This book deals primarily with positive economics.

(a)  

The quantity of a commodity that an individual is willing to purchase over a specific time period.

(a)  

graphical representation of demand

(a)  

is downward sloping due to the negative, or indirect relationship between the Price and Quantity demanded.

(a)  

P↑-D↓ - When the Price Increases the Demand Decreases P↓-D↑ - When the Price decreases, the Demand Increases

(a)  

the movement from one point to the other along the same demand curve due to the change in price

(a)  

shift of the demand curve either from the left or to the right.

(a)  

a. Population growth b. Age distribution c. Income d. Expectation of future price e. Environmental factors f. Taste and preference g. Change in the price of other goods

(a)  

goods which can take the place the other goods - positively related ex. coke and Pepsi { If the price of coke increases the demand for pepsi increases }

(a)  

goods which goes together - negatively related ex. coffee and sugar { If the price of coffee increases the demand for sugar decreases }

(a)  

Quantity of goods and services that a producer or seller is willing to sell at a given time and price.

(a)  

graphical representation of Supply

(a)  

The upward sloping due to the positive, or direct relationship between the Price and Quantity Supplied.

(a)  

P↑-S ↑ - When the Price Increases the Supply Increases P↓-S ↓ - When the Price decreases, the Supply Decreases

(a)  

movement from one point to the other along the same supply curve due to the change in price

(a)  

shift of the supply curve either from the left or to the right.

(a)  

a. Technology b. Change in the price of inputs c. Weather condition d. Natural Calamities e. Expectation of price f. Production costs

(a)  

Above the equilibrium point – S>D

(a)  

Below the equilibrium point - S<D

(a)  

If S>D - Price will decreases - If S<D - Price will increases

(a)  

Two kinds of price control

(a)  

legally set price below the equilibrium price - use to protect the consumer

(a)  

- legally set price above the equilibrium point - to protect the producer

(a)