7/29/2019 Principles of Economics Assignment 1

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Bautista, Mary Kriszelle A. IE 4- 1a IE 453

1. BASIC CONCEPT OF ECONOMICS

At the level of the individual, time and earnings are insufficient to satisfy all that anindividual wants and desires to consume. At the level of a nation, production inputs necessary

to satisfy the goods and services citizens want are scarce. Accordingly, nations as well asindividuals have to make difficult decisions regarding the use of scarce resources in theproduction of goods and services that are demanded.

Choices are necessitated because we as individuals and collectively as communities andnations, always want and desire more relative to the availability of resources to satisfy thosewants.

SCARCITY

This is the condition that countries and individuals have to face because productiveresources are insufficient to satisfy peoples unlimited wants and desires.

It is also defined as the limited supply of resources which are used for the satisfactionof unlimited wants. In other words, scarcity is the inability of human beings to provide themselves with allthe things they desire or want.WANTS

This is as simple as the desires of citizens. Wants differ from needs in a way that wantsare means of expressing a perceived need and it is broader than needs.

NEEDS

Described as the basic requirements for survival e.g. shelter, water and food. Recentlythere are many things that shifted from wants then to needs.

PRODUCTIVITY

Defined as the amount of output produced per unit of input output for example aregoods and services while input like productive sources.

ECONOMIC SYSTEMS

It is the ways in which people organize economics life to deal with the basic economicproblems of scarcity.

ECONOMIC INSTITUTIONS AND INCENTIVES

This includes households and families, and formal organizations like governmentagencies, cooperatives and labor unions. However, incentives as defined are the ones thatmotivate people and that influence human behavior.

7/29/2019 Principles of Economics Assignment 1

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EXCHANGE, MONEY AND INTERDEPENDENCE

As defined, exchange means the interactions between buyers and sellers. It is alsocalled as the trading between goods or services and between the goods and service. While

money is the good for trading and serves as the medium or exchange. And lastly,interdependence affects decisions and events of one part of the world or one sector of theeconomy.

2. NECESSITIES AND LUXURIES

These are the terms used if we have enough money that means what we have and what wewould like to have, respectively. A luxury good is a good fir which demand increases asdemand rises, while it is compared to necessity good for which demand increases asincome rises well actually they just have the same comparison between the two. Someexamples of luxuries are diamond necklaces, or some out of town vacation maybe. These are

things that are desirable but not necessary in a shortage of money.

A luxury good is a good for which demand increases as income rises, compared to a "necessity good" for whichdemand increases as income rises. Some examples of luxury goods are diamonds or nice vacations. They arethings that are desirable but not necessary in a shortage of money. Necessities are goods that are critical foreveryday life. Some examples of these could be toothbrushes and toilet paper. People always need necessities,

and there is not a large increase in sales when prices drop or income rises.

3. SUPPLY AND DEMAND The law of demand states that, if all other factors remain equal, the higher the price of a good,the less people will demand that good. In other words, the higher the price, the lower thequantity demanded.

The quantities that is to be sold at certain price, is what the law of supple states.