ECONOMICS 11

1

• ECONOMICS 11
• LECTURE 1
• INTRODUCTION

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What is Economics?

• Methodology of economics
• Framework
• Assumptions (e.g., ceteris paribus)
• Models (math, graphs, equations)

• It is a social science
• that deals with the allocation
• of scarce resources
• to satisfy unlimited
• human wants.

• Human
• Natural
• Physical

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Origin of the word Economics

• Oikonomia
• Greek word that means
• household management

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Two Main Branches

• Microeconomics
• - studies behavior of individual economic
  units
• - households, firms, markets
• Macroeconomics
• Focus is on the whole/aggregate economy
• E.g., GNP, GDP, inflation, unemployment

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Positive vs. Normative Economics

• Positive Economics
• Answers the question What is?
• The price of gasoline is Php 42.90/liter.
• The population growth rate is 2.3.
• 11 million Filipinos live on 1 a day.
• Normative Economics
• Answers the question What should be?
• The price of gasoline should be Php 40.0/liter.
• The population growth rate must only be at 2 .
• Filipinos ought to live on at least 5 a day.