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Societies face the economic problem of scarcity, where resources are limited but wants and needs are unlimited. This requires societies to make choices about what and how much to produce. Decisions must consider opportunity costs and maximize the use of scarce resources. Unemployment also presents a problem when idle resources exist. Governments can intervene in labor markets through tax policies to impact personal income and address issues like inequality. Poor infrastructure adversely affects developing economies by increasing costs and limiting development, mobility, and market efficiency. The Philippines needs infrastructure investment to enhance competitiveness and business conditions.

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Jeffrey Cardona
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42 views

Slide 1

Societies face the economic problem of scarcity, where resources are limited but wants and needs are unlimited. This requires societies to make choices about what and how much to produce. Decisions must consider opportunity costs and maximize the use of scarce resources. Unemployment also presents a problem when idle resources exist. Governments can intervene in labor markets through tax policies to impact personal income and address issues like inequality. Poor infrastructure adversely affects developing economies by increasing costs and limiting development, mobility, and market efficiency. The Philippines needs infrastructure investment to enhance competitiveness and business conditions.

Uploaded by

Jeffrey Cardona
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Slide 1 Example

All societies face economic problem, which is the problem of how to make the best
use of scarce resources. The economic problem exists because, although the needs
and wants of people are endless, the resources available to satisfy needs and wants
are limited.
Slide 3-4 Examples
The scarcity of resources makes us decide how the different goods should be
produced, what production method should be employed for the production of goods
so that the available resources should have best possible use. If the available
resources were abundant the problem of how goods should be produced would not
arise and consequently which ever method efficient or inefficient would not have
poured problem for the economy.
Slide 5
In reality, it is not always possible to produce all goods and services that people
want because resources are limited. Every society should decide what goods are to
be produced and in what quantities.
These decisions require an evaluation of

opportunity cost.

We cannot produce all material goods we desire, so that we tend to choose which to
produce out of scarce resources. In choosing a particular good to produce, we
should take into consideration our preference ratings on each and every good that
we tend to produce.
From the available resources can only be produced a limited quantity of goods and
services, and when the maximum combinations of goods and services that can be
produced has been reached, an increase in the quantity of the said product
connotes a decrease in quantity of another. So, opportunity is one of the factors that
we need to take into consideration in producing another product.
(Picture) Example 1
In the Philippine setting, for instance, we should answer this question:
Which one should be produced, palay or sugar cane? If we decide to produce more
palay, we think also of the quantity and quality of this good. Then it follows to
answer questions like: How about the equipment, machinery and the transportation
of this good? Is is really necessary to put up some financing institutions for this
product produced?

This implies that society has to decide which goods and in what quantities are to be
produced, Guns or butter has been the popular way of describing this dilemma of
choice posed by the scarcity of resources. But this choice between war goods and
goods for civilian consumption is not the only problem of choice faced by the
society. The society has to choose among hundreds of consumer goods themselves
and decide about allocation of resources between them. Of special mention in this
regard is the choice between necessities and luxuries.

Further, an important choice about the production of goods and resource allocation
is to decide about what amounts of consumer goods and capital goods are to be
produced. As shall be made clear later, this decision about the allocation of
resources between consumer goods and capital goods is of crucial importance from
the point of view of economic growth.
Society has to decide not only the relative amounts of consumer and capital goods
to be produced but it has also to determine the specific quantity of each type of
capital good and each type of consumer goods. More generally, in answering the
question what goods shall be produced, society would have to choose somehow or
other among scores of goods such as cars, hospitals, schools, houses, radios,
televisions, nuclear bombs, wheat , rice, cloth, machinery, steel, soap, lipsticks,
terylene, nylon, etc. But this decision is only half the battle.
Once society has decided which goods shall be produced, it must then give proper
weights to each of the good it selects to produce. Suppose society has decided to
produce wheat, hospitals, schools and cloth from the above list. The fact that
resources are scarce means that society cannot produce unlimited amounts of even
these selected goods.
Therefore, society must decide how much wheat, how many hospitals, how many
schools and how many metres of cloth are to be produced. In fact, most of the
goods in the above list will be decided to be produced. Only the question of what
quantity of each of the goods is to be produced would have to be decided.

Unemployment

Unemployment is a problem because it leads to the existence of idle resources. This


means that income is foregone on resources which would generate earnings to the
owner if used.
Types of Unemployment
Frictional unemployment is always present to some degree in an economy. It occurs
when there is a mismatch between the workers and jobs. The mismatch can be
related to skills, payment, work time, location, seasonal industries, attitude, taste,
and other factors. Frictional unemployment is influenced by voluntary decisions to
work based on each individual's valuation of their own work and how that compares
to current wage rates as well as the time and effort required to find a job.
Structural unemployment occurs when a labor market is not able to provide jobs for
everyone who is seeking employment. There is a mismatch between the skills of the
unemployed workers and the skills needed for the jobs that are available. It is often
impacted by persistent cyclical unemployment. For example, when an economy
experiences long-term unemployment individuals become frustrated and their skills
become obsolete. As a result, when the economy recovers they may not fit the
requirements of new jobs due to their inactivity.
Cyclical unemployment is a type of unemployment that occurs when there is not
enough aggregate demand in the economy to provide jobs for everyone who wants
to work. In an economy, demand for most goods falls, less production is needed,
and fewer workers are needed. With cyclical unemployment the number of
unemployed workers is greater that the number of job vacancies.
Seasonal Unemployment when an occupation is not in demand at certain seasons.
Inequality of Income Distribution
The base which is made up the majority of the of the population are the low income
earners who may only afford to satisfy their basic needs. The wealth of the nation is
concentrated in a small number of families who control the bulk of the countrys
purchasing power and who can afford to ride in gasoline-guzzling limousines, travel
to Europe when they want to take a break, and furnish their wardrobes with the
most expensive creation of the worlds most famous couturiers.
Remedies (Progressive Taxes)
Intro (Governments can intervene in the labor market by altering personal
disposable income via the tax and benefits system. This means employing a
progressive tax system.)
Slide 15: Example
Poor Infrastructure

The importance of infrastructure for developing countries cannot be overstated it


is a major driver for growth and poverty reduction. For example, the lack of
adequate transport, water and energy facilities can adversely affect the
development of existing industries and may preclude new entrants. An efficient
transport and communication infrastructure provides overall mobility for goods and
people alike contributes to reducing input and transaction costs and enhances the
efficiency of markets.

Infrastructure is one of the biggest challenges. In the Global Competitiveness Report


2014-2015 of the World Economic Forum, Philippines didn't fare well in terms of the
quality of the overall infrastructure. It ranked 91th among 144 countries. This can
be attributed to underinvestment in infrastructure. In order to host global
companies, Philippines will have to pay more attention to enhancing the
infrastructure. A well-developed transportation (roads, railroads, ports, and air
transport) and communication system is extremely essential for economic activities.
As per the World Bank's Ease of Doing Business 2015 report, Philippines ranked 95
out of 189 economies. It needs to improve its ranking in certain categories. It
ranked 161 in the category of starting a business, 124 in dealing with construction
permits, 108 in registering property, 104 in getting credit, 154 in protecting minority
investors, 127 in paying taxes, and 124 in enforcing contracts. Thus, the policy
makers should take steps to attract global companies or investors.

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