Basic Economics, Taxation and Agrarian Reform
Basic Economics, Taxation and Agrarian Reform
Basic Economics, Taxation and Agrarian Reform
ECONOMICS
Choices, Choices, Choices, . . .
Part 1: The
Basics
WHAT IS ECONOMICS???
Economics – the study of how individuals
and societies make decisions about ways
to use scarce resources to fulfill wants and
needs.
What does THAT mean?!!??!!
The Study of Economics
Macroeconomics
– The big picture: growth,
employment, etc.
– Choices made by large
groups (like countries)
Microeconomics
– How do individuals make
economic decisions
ECONOMICS: 5 Economic
Questions
Society (we) must figure out
OPPORTUNITY COST =
If I buy a Then I
pizza… can’t afford
the
movies…
Land
Goods
Labor
Production/Manufacturing
“Factory” Consumers
Capital
Services
Entrepreneurship
Capital Goods and Consumer
Goods
Capital Goods: are
used to make other
goods
Consumer Goods:
final products that are
purchased directly by
the consumer
CHANGES IN PRODUCTION
Specialization –
dividing up production
so that Goods are
produced efficiently
Hardee’s makes
hamburgers, not
shoes!!
Division of Labor –
different people
perform different jobs
You do your
to achieve greater job, and I will
efficiency (assembly do my Job and
we will be
line). more
EFFICIENT
CHANGES IN PRODUCTION
Consumption – how
much we buy
(Consumer
Sovereignty)
The DELL store is
empty because….
Everyone is at the
APPLE STORE!!!
CHANGES IN PRODUCTION
If we INCREASE land, labor, capital we
INCREASE production
– Many entrepreneurs invest profit back into production
GDP
The total peso value of ALL final Goods and
Services
produced in a country in a year.
(GROSS DOMESTIC PRODUCT)
World GDP
Total GDP 2005 11 Korea, Rep. 787,624
(millions of US dollars) 12 India 785,468
1 United States 12,455,068 13 Mexico 768,438
2 Japan 4,505,912 14 Russian Federation
3 Germany 2,781,900 763,720
4 China 2,228,862 15 Australia 700,672
5 United Kingdom 2,192,553 16 Netherlands 594,755
6 France 2,110,185 a 17 Switzerland 365,937
7 Italy 1,723,044 18 Belgium 364,735
8 Spain 1,123,691 19 Turkey 363,300
9 Canada 1,115,192 20 Sweden 354,115
10 Brazil 794,098 21 Saudi Arabia 309,778
Part 2: Costs and Revenues
Costs and Revenues
Cost – the total
amount of money it
takes to produce an
item (to pay for ALL
Factors of
Production).
Costs and Revenues
Margin=Extra
Space
Costs and Revenues
Profit – the difference
between Total Costs
and Revenues. This
is WHY you’re in
BUSINESS (Profit
Motive!)
– Profit=Revenues-Total cost
For Example