THE NATURE AND

IMPORTANCE OF
ECONOMICS
DISCUSSANT: ARNEL DE MESA MEDINA

WHAT IS ECONOMICS?
A social science concerned with using scarce resources to
obtain the maximum satisfaction of the unlimited material
wants of society Walstad and Bingham
The study of how societies use scarce resources to produce
valuable commodities and distribute them among people.
Samuelson and Nordhaus
The study of production, distribution, selling, and use of
goods and services. Collin
The study of how people use their limited resources to try to

OTHER IMPORTANT TERMS TO

REMEMBER
SCARCITY refers to the condition wherein most things
that people are available only in limited supply.
ECONOMIC GOOD/S anything, either physical
commodity or a service, which yields utility and which
could command a price if bought or sold in the market.
UNLIMITED WANTS refers to a persons desires or
preferences for specific ways of satisfying a basic need.

OPPORTUNITY
COST
Defined as the cost of choosing to use resources for one
purpose measured by the sacrifice of the next best
alternative for using those resources.

FUNDAMENTAL ECONOMIC
PROBLEMS

1. What goods and services must be produced and

in what quantities?
2. How shall these goods and services be produced?
3. For whom shall these goods and services be
produced?

TYPES OF ECONOMIC
SYSTEMS
1. Capitalism
2. Communism
3. Socialism
4. Mixed Economies

CAPITALISM
- Is an economic system mainly characterized by
private individuals owning and operating the
majority of businesses that produce goods and
services.
FORMS OF
CAPITALISM
1. Pure Capitalism
2. Modified Capitalism

PURE
CAPITALISM
1. All economic decisions are made without
government intervention
2. Competition serves to determine the goods and
services needed by the society
3. Competition will determine who will survive in
the marketplace. Under the modified capitalism,
the government intervenes and regulates
business to a certain extent.

RIGHTS OF
CAPITALISM
1. Private property
2. Profits
3. Business decisions
4. Choice

COMMUNISM
- Is a society in which the government owns all the
nations resources.
SOCIALISM
- Under socialism, the government owns and
operate the basic industries like communication,
water service, postal service, transport, banking
and selected manufacturing businesses.

MIXED
ECONOMIES
- It contains both private and state enterprises.
ECONOMIC
RESOURCES
1. Land
2. Labor
3. Capital
4. Entrepreneurial ability

ECONOMIC
GOALS
1. Economic growth
2. Full employment
3. Economic efficiency
4. Price level stability
5. Economic freedom
6. Equitable distribution of income
7. Economic security
8. Balance of trade

DIVISIONS OF
ECONOMY
1. Microeconomics
2. Macroeconomics