Principles Of Economics Assignment 1 5y235o

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 an individual 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 as individuals have to make difficult decisions regarding the use of scarce resources in the production of goods and services that are demanded. Choices are necessitated because we as individuals and collectively as communities and nations, always want and desire more relative to the availability of resources to satisfy those wants. SCARCITY This is the condition that countries and individuals have to face because productive resources are insufficient to satisfy people’s unlimited wants and desires. It is also defined as the limited supply of resources which are used for the satisfaction of unlimited wants. In other words, scarcity is the inability of human beings to provide themselves with all the things they desire or want.

WANTS This is as simple as the desires of citizens. Wants differ from needs in a way that wants are 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. Recently there 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 are goods and services while input like productive sources. ECONOMIC SYSTEMS It is the ways in which people organize economics life to deal with the basic economic problems of scarcity. ECONOMIC INSTITUTIONS AND INCENTIVES This includes households and families, and formal organizations like government agencies, cooperatives and labor unions. However, incentives as defined are the ones that motivate people and that influence human behavior.

EXCHANGE, MONEY AND INTERDEPENDENCE As defined, exchange means the interactions between buyers and sellers. It is also called 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 the economy. 2. NECESSITIES AND LUXURIES These are the used if we have enough money that means what we have and what we would like to have, respectively. A luxury good is a good fir which demand increases as demand rises, while it is compared to “necessity good” for which demand increases as income rises well actually they just have the same comparison between the two. Some examples 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 which demand increases as income rises. Some examples of luxury goods are diamonds or nice vacations. They are things that are desirable but not necessary in a shortage of money. Necessities are goods that are critical for everyday 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 the quantity demanded. “The quantities that is to be sold at certain price”, is what the law of supple states.