Activity 1 – AP 103 (Micro and Macro Economics)

Name ___________________________________

1. Why study Economics?

2. Why is it significant that economics is not a laboratory science? What problems
may be involved in deriving and applying economic principles?
3. Explain the following statements:
a. Good economic policy requires good economic theory.
b. Generalization and abstraction are nearly synonymous.
c. Facts serve to sort out good and bad hypothesis.
4. Critically evaluate this statement: “The trouble with economic theory is that it is
not practical. It is detached from the real world.”
Activity 2 – AP 103 (Micro and Macro Economics)

Name ___________________________________

Cite at least 5 statements that apply to Microeconomics and 5 to Macroeconomics.

Activity 3 – AP 103 (Micro and Macro Economics)

Name ___________________________________

1. Explain this statement: “If resources were unlimited and were freely available,
there would be no subject called economics.”
2. What are economic resources? What are the major functions of the entrepreneur?
3. Why is the problem of unemployment part of the subject matter of economics?
4. Specify and explain the shapes of the marginal-benefit and marginal-cost curves.
How are these curves used to determine the optional allocation of resources to a
particular product?
5. Explain: “Affluence tomorrow requires sacrifice today.”
Activity 4 – AP 103 (Micro and Macro Economics)

Name ___________________________________

1. Explain the law of demand. Why does a demand curve slope downward?
2. What are the determinants of demand? What happens to the demand curve when
each of these determinants changes? Distinguish between a change in demand and
a change in the quantity demanded, noting the cause(s) of each.
3. Explain the law of supply. Why does the supply curve slope upward? What are the
determinants of supply? What happens to the supply curve when each of these
determinants changes?
Activity 5 – AP 103 (Micro and Macro Economics)

Name ___________________________________

1. Why is private property, and the protection of property rights, so critical to the
success of the market system?
2. What is meant by the term “division of labor”? What are the advantages of
specialization in the use of human and material resources?
3. What problem does barter entail? Indicate the economic significance of money as a
medium of exchange. What is meant by the statement “We want money only to
part with it.”?
4. How does that competition influence process? In what sense is there competition
among buyers?
Activity 6 – AP 103 (Micro and Macro Economics)

Name ___________________________________

1. Who is unaffected or helped by inflation?

2. Why is economic growth important?
3. What factors make it difficult to determine the unemployment rate? Why is
unemployment an economic problem?
4. A noted television host once defined inflation as follows: “Inflation? That means
your today won’t buy as much as it would have during the Depression when you
didn’t have any.” Was his definition accurate? Explain.
Activity 7 – AP 103 (Micro and Macro Economics)

Name ___________________________________

1. Draw two linear demand curves parallel to one another. Demonstrate that for any
specific price change demand is more elastic on the curve closer to the origin.
2. What are the major determinants of price elasticity of demand? Use those
determinants and your own reasoning in judging whether demand for each of the
following products is probably elastic or inelastic:
a. Bottled water
b. Toothpaste
c. Ketchup
d. Diamond bracelets
e. Microsoft Windows operating system
Activity 8 – AP 103 (Micro and Macro Economics)

Name ___________________________________

1. What is the significance of resource pricing? Explain how the factors

determining resource demand differ from those determining product demand.
Explain the meaning and significance of the fact that the demand for a resource
is derived demand. Why do demand curves slope downward?
2. Explain the economics of the substitution of ATMs for human tellers. Some
banks are assessing transaction fees when customers use human tellers rather
than ATMs. What are these banks trying to accomplish?
Activity 9 – AP 103 (Micro and Macro Economics)

Name ___________________________________

1. Explain why the general level of wages is high in Manila and other industrially
advanced countries. What is the single most important factor underlying the
long-run increase in average real-wage rates in Manila?
2. What is meant by investment in human capital? Use this concept to explain-
a. wage differentials, and
b. the long-run rise of real wage rates in Manila.
Activity 10 – AP 103 (Micro and Macro Economics)

Name ___________________________________

1. How does the economists’ use of the term “rent” differ from everyday usage?
Explain: “Though rent need not be paid by society to make land available, rental
payments are very useful in guiding land into the most productive uses”.
2. What are the major economic functions of the interest rate? How might the fact
many businesses finance their investment activities internally affect the
efficiency with which the interest rate performs its functions?