Economic Methodology in Microeconomics
Economic Methodology in Microeconomics
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INSTRUCTIONAL MODULE IN
BACC ECO 111: Basic Microeconomics
PRELIMINARIES
Module 3
I. Lesson Number: 1
In order to understand economics, it’s important to master a set of key definitions and
understand how they interconnect. These concepts will be used many times throughout this
module.
LESSON PROPER
Getting Started
What does the photo below trying to impart us? How can you relate the photo in economic way
of thinking?
[Link]
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CSTC COLLEGE OF SCIENCES TECHNOLOGY AND
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CSTC College Bldg. Gen. Luna St. Maharlika Hi-way, Pob. 3, Arellano Sub. Sariaya Province of Quezon R4A
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Discussion
Economic methodology
Figure 1.1
Process of Economic Policy Formulation
Policies are courses of action based on economic principles and are intended to solve a
specific economic problem and to achieve economic goals.
Economic policies can be assessed in either two ways in order to know its effectiveness.
Such as: Positive economics which attempts to describe how economy and economic policies
work without resorting to value judgment. It can also be tested and either confirmed or rejected
based on facts Ex. “Philippine unemployment rate in January 2019 is 12% is a positive
economics since it can be tested, referred by statistical data of Department of Labor and
Employment (DOLE).
Normative economics involves the use of value judgments to assess the performance growth of
the economy and economic policies. Ex. “Agriculture must be the top priority over the industry”
is a normative statement since it is based on the value judgment and therefore cannot be
tested, confirmed or refuted.
Relation to mathematics:
For illustration, given a mathematical equation or a demand function in a hypothetical
[Link] follows:
Function is a quantitative relationship expressed in the form of an equation in which one or more
independent variables uniquely determine the values of the dependent variable. Consider a
common functional relationship in economics
Qd = 90 – 5P
The above function can be shown in the form of a table by just assuming any value for Price (P)
and computing for the corresponding Qd table 1 is a tabular presentation of the function.
Table 1
Demand Schedule
Price (P) Quantity Demanded
(Qd )
0 90
5 65
15 15
18 0
20 -10
Casiana Salud-Payumo [Link] Understanding Economics, 2012, Alteo Digital &
Printers, Sampaloc , Manila,p9.
The above schedule can be presented in the form of a graph. A graph is a two-
dimensional diagram that generally depicts the relation between two variables by means of
continuous curves or lines. The numerical value of one variable is measured along the vertical
axis starting from the origin and the other variable along the horizontal axis also starting from
the point of origin. The lower left-hand corner of a graph where the two axes meet is called the
origin.
The slope or coefficient of price is negative (-5) so its graph is downward sloping to the
right as shown below figure.
Take note that demand curves passes the y-intercept, that is at P=18 and Q d =0. This
just shows that the commodity can only be bought at a price below 18.00.
On the other hand, the maximum quantity demanded is 90 as shown by its X- intercept.
This means that at price zero or if the product is free, quantity demanded is 90 units.
Figure 2
Demand Curves
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independent
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Casiana Salud-Payumo [Link] Understanding Economics, 2012, Alteo Digital & Printers,
Sampaloc , Manila,p9.
How will you make a few decisions that are based on limited resources? Take the following:
Are you the lucky student who is taking every class you wanted with your first-
choice professor during the perfect time and at the ideal location?
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Think for a moment, if you had all the money in the world, where would you live? It’s
probably not where you’re living today. You have probably made a housing decision based on
scarcity. Given limited time, you may have chosen to live close to work or school. Given the
demand for housing, some locations are more expensive than others, though, and you may
have chosen to spend more money for a convenient location or to spend less money for a place
that leaves you spending more time on transportation. There is a limited amount of housing in
any location, so you are forced to choose from what’s available at any time. What will you do?
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CSTC COLLEGE OF SCIENCES TECHNOLOGY AND
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References:
Lesson No: 2
Lesson Title: Agrarian Reform
CSTC COLLEGE OF SCIENCES TECHNOLOGY AND
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A social or political movement INC.
to bring about land reforms and to improve the economic
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status of the farmer.
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LESSON OBJECTIVES:
At the end of this lesson, you will be able to:
To know the nature of Agrarian Reform;
To differentiate Agrarian Reform to land Reform;
To explain agrarian problems during the barangay period in Philippine history;
To trace development of land ownership in the Philippines; and
To enumerate the different factors which led to the presence of Agrarian problems.
LESSON PROPER
Getting Started
What does the photo below trying to impart us? How can you relate the photo in economic way
of thinking?
CSTC COLLEGE OF SCIENCES TECHNOLOGY AND
COMMUNICATION, INC.
CSTC College Bldg. Gen. Luna St. Maharlika Hi-way, Pob. 3, Arellano Sub. Sariaya Province of Quezon R4A
Registrar’s Office: 042 3290850 / 042 7192818 | CSTC IT Center: 042 7192805 | Atimonan Contact Number: 042 7171420
[Link]
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Agrarian Reform
A social or political movement to bring about land reforms and to improve the economic
status of the farmer.
1. Credit support;
2. Infrastructure;
3. Farm extension;
4. Legal assistance;
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6. Development
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7. Land Distribution:
a. Interrelationship pertaining to ownership;
b. Lease, rental and subdivision of land;
c. Improvement of land use; and
d. Increase of produce.
8. Solving agricultural labor problems
9. Tenure ( Period of Renting the Land)
10. Administration and Financing
11. Social welfare service for improving the quality of life of the farmers.
Land reform- is a method for effecting land distribution of large estates into small land holdings
which would be given to the tillers of soil.
Mid-13th Century The Ten Bornean Datus Epic refers to the ten chieftains who allegedly
ventured to the island of Panay boarding a boat called balangay ( or barangay) to evade the
tyrannical ruler of Borneo. Datu Makatunaw. The datus, believed to be the fathers of precolonial
Philippines, were the following:
Before the Spaniards Came- there was already barangay system of land distribution. When
group of barangays organized to form a bigger group for more protection and survival the head
was called rajah or sultan. Each barangay ruled by a chieftain who had a power to divide the
land among his followers.
1. Royal Encomiendas:
a. confined to the areas which are irrigated and cultivated;
b. near the big town and seaport;
c. settled by mostly Spaniards; and
d. reverted to public domain,
2. Private Encomienda:
a. grants awarded to private individuals:
b. grant specified a two generation collection of tributes; and
c. encomiendero regard grant as his private property.
The private encomiendero lived far from the encomienda gave rise to the difficulty of overseeing
the welfare of the inhabitants and no rapport was established. The collection of tributes gave
rise to violence, torture and harassment, enslavement and death. Encomienderos abused their
power. This was the start of the agrarian reform when the abusive encomienderos were
reported to the priest and the priest reported this to the administration. The tribute then was 1/3
church authorities, 1/3 to the Crown and 1/3 to the encomienderos. By the end of Spanish
regime the friars own 185,000 hectares or one fifteenth of the land under cultivation.
1. Galleon Trade-the other encomienderos were attracted to shift their activities into trading
than merely making money tor collecting traibutes. Mexico and Manila was open for
trading.
2. Reduced income from Land due to the share given to the Crown and the friars.
3. Different Revolts rose due to the inhuman conditions collecting tributes:
a. Pampanga Revolt protested against exorbitant tributes and abusive treatment of the
natives by encomienderos.
b. Pampanga Revolt 1660 the collection of arrears through forced labor and not in
accordance with law, not according to his own whims and discretion.
c. Bohol Revolt 1621-Visayans were sent in the shipyards in Cavite, Protest against the
payment of tributes and forced labor.
d. Cagayan Revolt 1596-1621 revolted against the addititon of four reales to the tribute
and the abuses of encomendero.
4. Royal Decree of 1721- all encomiendas which were vacated should pass on to the
Crown.
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Where are the Encomiendas?
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1. Friars
2. Local elites or caciques or principalia - collectors and agents of encomederos. They
were the Datu and chieftains of the barangay.
3. Absorbed as private property of the encomederos that became hacienda meaning
wealth.
a. Hacienda vast track of land where the agricultural laborers were paid under daily
wage.
b. Haciendas usually are found in Tarlac, Nueva Ecija, Visayas and in the Cagayan
Valley and Mindanao.
After the encomiendas the Kasama System was introduced because the friars and the caciques
were not capable of working and tilling the land they had to make use of the services of native
farmers. Agreement was made between management of the farm between farmers and the
landowners.
1. Inqulinato System - the land owner leased a portion of his land to a farmer or to anyone
who could undertake the tilling of his land for an agreed amount. It was a term used for
the individual who could take charge of raising crops for commercial purposes.
2. Kasama System - It was the landowner and the tiller of the soil shared in the produce of
the soil, Crop sharing
Pacto de Retro - lt was the system where the elite expanded money though lending money to
the farmer proprietor who would mortgage his land for an amount less than the actual cost.
3. Public Land Acts (Homestead Act) - encouraged the emigration farmer tenants to virgin
lands for homestead purposes.
4. Rice Share Tenancy Act-defining the distribution of shares between tenants and
landlords.
American colonial government purchased 160.000 hectares of tenanted land belonging to the
Catholic Church.
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1. Anti-usury campaign.
2. Freedom to join legitimate and duly registered labor organizations.
3. Protection tenants against ejection from the farms they till without just cause.
4. Regulations of share crop distribution.
5. Opening of virgin lands specially in Mindanao and Isabela.
6. Proliferation of homestead and settlement areas.
7. Acquisition of big land estates and distribution among tenant farmers.
a. Any citizen of lawful age of the Philippines or the United States or any Corporation
duly recognized by law whose capital stock was 60%Filipino owned could lease
public lands not exceeding 1,029 hectares.
b. Annual rental should not be less than 3% of the value of land, according to appraisal
and/or reappraisal made in accordance with the provisions in Section 114 less than
2% of the appraised and reappraised value.
3. Commonwealth Act No. 103 - Enacted on October 29, 1936 to afford protection of labor
by creating the Court of "Industrial Relations which was authorized to fix minimum
rentals to be paid by tenants. Compulsory arbitration was enforced for any disagreement
between employers and employees, and tenants and landlords.
4. Commonwealth Act No. 213 - Any person or persons, landlord or landlords, corporation
or corporations or their agents, partnership or partnerships or their agents, who
intimidate or coerce any employees or laborer or tenant under his or their employ. With
the intent of preventing such employee or laborer or tenant from joining any registered,
legitimate labor organization of his own choosing or dismisses or threatens to dismiss
such employee or laborer or tenant from employment for having joined or for being a
member of any registered, legitimate labor organization, shall be guilty of felony and
shall be punished by imprisonment of not exceeding one year or a fine not exceeding
one thousand pesos or both, at the discretion of the court.
5. Commonwealth Act No. 316 - Providing for the subdivision and sale of all the portions of
the friar estates which had remained undisposed, allowing the purchasers ten years
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price in ten equal installments, with annual interest of
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were to be given preference to buy the land. President Quezon took immediate steps to
implement the provision of this act. Before the outbreak of world war in the buenavista,
the tambobong, Dinalupihan, Lian and other estates were acquired by the government
and sold to tenants.
6. Commonwelth Act No. 538- Prohibiting the ejectment of tenants from lands being
acquired by the government.
7. Comonwealth Act No. 539- Authorizing the President to acquire private lands for resale
as homesites and small farms to bonafide tenants or others who would develop and
work on the land.
8. Commonwealth Act No. 459 - Creating the Agricultural and Industrial Bank with power to
grant agricultural and real estate loans, to establish and operate bonded warehouses,
and to subscribe, purchase or guarantee bonds issued by agricultural and industrial
concerns.
1. The population of landless owners were still very high compare to the small number of
landowners.
Example:
Negros Occidental Productive Land - 10% of the total number of families was owned by few. Let
say in 1000 families there were only 100 families who owned the productive land.
Central Luzon- the fertile areas where artificial irrigation was available (at government expense)
were owned by a few families.
1. The Political condition of the Time- The government was still in the hands of powerful
landlords who happened to be ruling the legislative power. It's a natural tendency for
them to protect their own interest rather than the poor tenants and agricultural laborers.
2. Ignorance of Poor Tenants- Many children of poor peasants were not able to go to
school due to work in the farm and intimidated by the practice of rich landlords.
3. Poor Implementation of the Law - Since most government officials were associated with
the ownership of the land there was contradiction between theory and practice.
4. Lack of Logistic Support- Not enough funds were allocated to carry out agrarian reforms.
5. The Advent of World War II - the Philippines came under Japanese occupation.
5. Eradication of usury through the passage of the Anti-Usury law. Before the enactment of
his law, customary rates range 30% to l00% for one half year. Payable either in cash or
produce after the harvest. The law provided an equitable and fair interest rate, which
varied according to certain specified conditions but generally not more than 15% per
annum.
6. Road Building.
7. The Homesteads and re-settlements projects.
8. The acquisition of big landed estates and the apportionment of these among tenant-
farmer.
Republic Act No. 34 1946 - this legislation provided for a 70-30% Crop sharing between tenant
and landlord.
70%- of the produce for the tenant depending on his contribution in terms of draft animals, cost
of transplanting, and use of fertilizers
1. Agricultural Tenancy Act (republic Act No. 1199 of 1954) which provided greater
protection to the tenants by allowing them freedom to choose the tenancy system which
would be beneficial to them.
a. This Act provided for the repeal of all other tenancy laws except the Sugar Tenancy Act.
It also provided for the creation of the Agricultural Tenancy Commission and the Court of
Agrarian Relations, given the task of administering and settling problems arising from
tenancy. An Act considered Magna Carta of Tenants.
a. This agricultural Land Reform code was the most comprehensive legislation on
agrarian reform until Presidential Decree No.27.
b. Land Reform Code Republic Act No. 6389 (code of Agrarian Reform) in 1971. It
created the Department of Agrarian Reform.
c. The Agricultural Land Reform code introduced leasehold system and eventually the
farmer would own the land.
Presidential Decree No. 27 Agrarian Reform Program or President Ferdinand Marcos shortly
after the declaration of Martial Law in September 1972.
Decreeing the emancipation of tenants from the bondage of the soil transferring to them the
ownership of the land they till and providing the instruments and mechanism therefore.
Now therefore, I, Ferdinand Marcos, President of the Philippines by virtue of the power vested in
me by the constitution as Commander in chief of the Armed Forces of the Philippines, and
pursuant to Proclamation No. 1081, dated September 21, 1972 and General order No. 1 dated
September 22, 1972, as amended, do hereby decree and Order emancipation of all tenant
farmers as of this October 21, 1972.
This shall apply to tenant-farmers of private agricultural lands primarily devoted to rice and corn
under a system of share crop or lease-tenancy, whether classified as landed estate or not.
The tenant farmer, whether in land classifies as landed estate or not shall be deemed owner of
a portion constituting a family sized farm of five (5) hectares if not irrigated and three (3)
hectares if irrigated.
In all cases, the landowner may retain an area of not more than seven (7) hectares it such
landowner is cultivating such area or will now cuitivate it...etc.
PD No. 27 repealed or modified all laws on Agrarian Reform promulgated by all previous
presidents.
Executive Order No. 228 (July 17, 1987) of Declaring Full Land Ownership to qualified Farmer
Beneficiaries covered by Presidential Decree No. 27; determining the values of Remaining
Unvalued Rice and Corn Lands subject P.D. No 27 and providing for the Manner of Payment by
the Farmer Beneficiary and Mode of Compensation to the Landowner.
Executive Order No. 131 (July 22, 1987) instituting Comprehensive Agrarian Reform Program
It explained the principles behind the program which may be summarized as follows:
5. The reform requires the participation of all concerned in the planning, organization and
management of the program.
6. The entire Filipino people must extend support and full cooperation to implement the
program effectively.
7. The program should be realistic and flexible to take into account differences from place
to place and from Community to community
Application
LAND REFORM
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CSTC COLLEGE OF SCIENCES TECHNOLOGY AND
COMMUNICATION, INC.
CSTC College Bldg. Gen. Luna St. Maharlika Hi-way, Pob. 3, Arellano Sub. Sariaya Province of Quezon R4A
AGRARIAN
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Center: 042 7192805 | Atimonan Contact Number: 042 7171420
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Prepared by:
ANNILITO A. ANONUEVO
Instructor