REV IS IT IN G E C O NO M IC S

AS A S O C IA L S C IE N C E
WHAT IS ECONOMICS
• ECONOMICS – MAY APPEAR TO BE THE STUDY OF COMPLICATED TABLES AND CHARTS
STATISTICS AND NUMBERS, BUT, MORE SPECIFICALLY, IT IS THE STUDY OF WHAT
CONSTITUTES RATIONAL HUMAN BEHAVIOR IN THE ENDEAVOR TO FULLFILL NEEDS AND WANTS.

• ECONOMICS COMESFROM THE GREEK WORD “OIKONOMIA” MEANING “HOUSEHOLD

MANAGEMENT”.
• SOME OF THE DEFINITIONS ARE AS FOLLOWS:
1. WEBSTER – DEFINED ECONOMICS AS A BRANCH OF KNOWLEDGE THAT DEALS WITH THE
PRODUCTION, DISTRIBUTION AND CONSUMPTION OF GOODS AND SERVICES.
2. ACCORDING TO FAJARDO – ECONOMICS IS THE PROPER ALLOCATION AND EFFICIENT USE OF
AVAILABLE RESOURCES FOR THE MAXIMUM SATISFACTION OF HUMAN WANTS.
IMPORTANCE OF ECONOMICS
• THIS BROUGHT ABOUT BY THE MERE FACT THAT HIS PHYSICAL EXISTENCE IN THE
WORLD DEPENDS UPON ECONOMICS. PEOPLE CANNOT LIVE WITHOUT
PRODUCTION AND CONSUMPTION. ALMOST ALWAYS, HUMAN ACTIVITIES
INVOLVE ECONOMICS.
FOR INSTANCE, EARNING MONEY , BUYING GOODS AND SERVICES DEPOSITING AND
WITHDRAWING MONEY IN THE BANK, THESE ARE ALL ECONOMIC ACTIVITIES.
• ECONOMICS IS IMPORTANT IN ORDER TO UNDERSTAND PROBLEMS FACING THE
CITIZEN AND THE FAMILY; TO HELP GOVERNMENT PROMOTE GROWTH AND
IMPROVE THE QUALITY OF LIFE WHILE AVOIDING DEPRESSION AND INFLATION TO
ANALYZE FASCINATING PATTERNS OF SOCIAL BEHAVIOR.
 THE NATURE OF ECONOMICS

•ECONOMICS IS A SCIENCE – A SCIENCE IS A BODY OF

SYSTEMATIC KNOWLEDGE BUILT UPON BY CONSCIOUS EFFORTS.
•IT IS CLASSIFIED AS SOCIAL SCIENCE BECAUSE IT DEALS WITH
THE STUDY OF MAN’S LIFE AND HOW HE LIVES WITH OTHER MEN.
• ECONOMICS, AS A SOCIAL SCIENCE – IS THE STUDY OF THE RELATIONS
BETWEEN PEOPLE DURING THE PRODUCTION, DISTRIBUTION AND
CONSUMPTION OF WEALTH IN HUMAN SOCIETY.
• ECONOMICS EXPLAINS HOW PEOPLE INTERACT WITHIN MARKETS TO GET WHAT
THEY WANT OR ACCOMPLISH CERTAIN GOALS.
• A STUDY OF ECONOMICS CAN DESCRIBE ALL ASPECTS OF A COUNTRY’S
ECONOMY, SUCH AS HOW COUNTRY USES ITS RESOURCES, HOW MUCH TIME
LABORERS DEVOTE TO WORK AND LEISURE, THE OUTCOME OF INVESTING IN THE
INDUSTRIES OR FINANCIAL PRODUCTS, THE EFFECT OF TAXES ON A POPULATION,
AND WHY BUSINESSES SUCCEED OR FAIL.
OF THE SOCIAL SCIENCES, ECONOMICS HAS MORE ADVANTAGES AS A
SCIENTIFIC DISCIPLINE FOR TWO MAJOR REASONS:

1. ECONOMIC MOTIVES OF HUMAN BEINGS MAY BE MORE REGULAR

AND THEREFORE PERSISTENT. THEY CAN BE MORE PREDICTABLE.
2.THERE IS MORE FACTUAL INFORMATION IN THE FORM OF
STATISTICS. THIS GIVES A SUBSTANTIAL BASIS FOR THE
VERIFICATION AND FORMATION OF ALTERNATIVE ECONOMIC
THEORIES.
MACROECONOMICS AND MICROECONOMICS
• THE STUDY OF ECONOMICS IS DIVIDED INTO TWO BRANCHES:
1. MACROECONOMICS – DEALS WITH THE ECONOMIC BEHAVIOR OF THE WHOLE
ECONOMY OR ITS AGGREGATES SUCH AS GOVERNMENT, BUSINESS AND
HOUSEHOLDS.
2. MICROECONOMICS – DEALS WITH THE ECONOMIC BEHAVIOR OF INDIVIDUAL
UNITS SUCH AS THE CONSUMERS, FIRMS AND THE OWNERS OF THE FACTORS
OF PRODUCTION. IT IS ALSO KNOWN AS PRICE THEORY.
DIVISION OF ECONOMICS
• ECONOMICS HAS FIVE MAJOR DIVISIONS. THESE DIVISIONS ARE AS FOLLOWS:
1. PRODUCTION – REFERS TO THE PROCESS OF PRODUCING OR CREATING
GOODS NEEDED BY THE HOUSEHOLDS TO SATISFY THEIR NEEDS.
2. DISTRIBUTION - THIS REFERS TO THE MARKETING OF GOODS AND SERVICES
TO THE DIFFERENT ECONOMIC OUTLETS FOR ALLOCATION TO INDIVIDUAL
CONSUMERS.
3. EXCHANGE – THIS IS A PROCESS OF TRANSFERRING GOODS AND SERVICES TO
A PERSON OR PERSONS IN RETURN FOR SOMETHING.
4. CONSUMPTION – THIS REFERS TO THE PROPER UTILIZATION OF ECONOMIC
GOODS.
5. PUBLIC FINANCE - THIS PERTAINS TO THE ACTIVITIES OF THE GOVERNMENT
REGARDING TAXATION, BORROWINGS, AND EXPENDITURES. IT DEALS WITH THE
EFFICIENT USE AND FAIR DISTRIBUTION OF PUBLIC RESOURCES IN ORDER TO
ACHIEVE THE MAXIMUM SOCIAL BENEFITS.
 TOOLS OF ECONOMICS
• SOME OF THE TOOLS USED BY THESE ECONOMISTS ARE THE FOLLOWING:
1. LOGIC – IT IS A SCIENCE THAT DEALS WITH SOUND THINKING AND
REASONING .
2. MATHEMATICS – IT IS A SCIENCE THAT DEALS WITH NUMBERS AND THEIR
OPERATIONS.
3. STATISTICS – IT IS A BRANCH OF. MATHEMATICS ENGAGES WITH THE
ANALYSIS AND INTERPRETATION OF NUMERICAL DATA.
THE ECONOMIC RESOURCES
1. LAND – THESE RESOURCES CONSIST OF FREE GIFTS OF NATURE WHICH INCLUDES ALL NATURAL
RESOURCES ABOVE, ON , AND BELOW THE GROUND SUCH AS SOIL, RIVERS, OCEANS, LAKES, FORESTS,
MOUNTAINS, MINERAL RESOURCES AND CLIMATE.
2. LABOR – THIS ALSO TERMED AS HUMAN RESOURCES. LABOR REFERS TO ALL HUMAN EFFORTS, BE IT
MENTAL OR PHYSICAL, THAT HELP TO PRODUCE WANT SATISFYING GOODS AND SERVICES.
3. CAPITAL – CAPITAL HAS TWO ECONOMIC DEFINITIONS AS A FACTOR OF PRODUCTION.
• CAPITAL CAN REPRESENT