Module 1
Introduction
Part 1: Introduction
Activity 1: Define Microeconomics through using the pictures below.
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This activity will test your prior knowldege about microeconomics.
Activity 2: Click the link provided and watch the video clip. Identify the importance of
Microeconomics and provide brief explanation.
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Microeconomics
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Activity 3: Click the link provided and watch the video clips. Compare Macroeconomics and
Microeconomics using the chart below. Provide brief explanation on how they affect each other
or explain their relations.
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Differences Relations Differences
Part 2: The Nature and Method of Economics
Economics
The study of how humans make decisions in the face of scarcity.
These can be individual decisions, family decisions, business decisions or societal
decisions.
Scarcity means that human wants for goods, services and resources exceed what is available.
Feature of Economic Perspective
Scarcity and Choice Purposeful Behavior Marginal Analysis
Resources are scarce Rational self-interest Marginal benefit
Choices must be made Individual and utility Marginal cost
Opportunity cost Firms and profit Marginal means extra
There’s no free lunch Desired outcomes Mb and MC
Watch the following videos. This will help for further understanding of the features of economic
perspective.
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Microeconomics vs Macroeconomics
Microeconomics Macroeconomics
Study of individuals, households and firms' behavior in Takes a top-down approach and looks at
decision making and allocation of resources. It the economy as a whole, trying to
generally applies to markets of goods and services and determine its course and nature.
deals with individual and economic issues.
Watch this video for further understanding about the distinction of Macro and Micro economics.
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Basic Concepts
Incentives and behaviors
How people, as individuals or in firms, react to the situations with which they are
confronted.
Utility theory
Consumers will choose to purchase and consume a combination of goods that will
maximize their happiness or “utility,” subject to the constraint of how much income they
have available to spend.
Production theory
This is the study of production—or the process of converting inputs into outputs.
Producers seek to choose the combination of inputs and methods of combining them that
will minimize cost in order to maximize their profits.
Price theory
Utility and production theory interact to produce the theory of supply and demand, which
determine prices in a competitive market. In a perfectly competitive market, it concludes
that the price demanded by consumers is the same supplied by producers. That results in
economic equilibrium.
Opportunity cost
Refers to what you have to give up to buy what you want in terms of other goods or
services. When economists use the word “cost,” we usually mean opportunity cost.
Economic Growth
It is an increase in the capacity of an economy to produce goods and services, compared
from one period of time to another.
Watch this video for further understanding about Opportunity Cost and Economic Growth.
[Link] [Link]
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Categories of Scarce Resources
Labor
Mental and physical efforts of humans (excluding entrepreneurial organization) used for
the production of goods and services.
Labor includes both the physical effort of factory workers and farmhands often associated
with labor, as well as the mental effort of executives and supervisors.
Capital
It is the manufactured, artificial, or synthetic goods used in the production of other goods,
including machinery, equipment, tools, buildings, and vehicles.
Land
It is the naturally occurring materials of the planet that are used for the production of
goods and services, including the land itself; the minerals and nutrients in the ground; the
water, wildlife, and vegetation on the surface; and the air above. Entrepreneurship
Entrepreneurship
It is the special sort of human effort that takes on the risk of bringing labor, capital, and
land together to produce goods.
FINAL OUTPUT: As final output in this module, you are expected to create an “info graph”
containing the concept in Microeconomics
References:
Retrieved from:
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