A.

Activity

Economics is significant in our lives and has given so many contributions to

everything we have to this day. It’s so evident that it was able to help us to create
decisions in our lives; it made way for us to maximize our resources in what we have,
starting from our household to the outside world and the society. But what examples
do economics was able to give a contribution to our daily lives?

There are many ways economics can be used in our daily lives, such as the
opportunity cost. We all know that in economics, opportunity cost is something we
sacrifice to gain what we are lacking. And this is what we frequently use in decision-
making scenarios. An example of that is offering our leisure time to give more attention
to our studies. The opportunity cost is the time we exert for studying, which is a good
example, especially for students who struggle with procrastination. It was able to help
me learn to manage my time. And then there’s behavioral economics, where it explains
our behaviors when it comes to monetary decisions and our needs and wants.
Behavioral Economics stated that we are often driven by irrational and non-utility
influences such as the nudging technique by companies. They ask you if we wish to
upsize our drinks, add some side dishes to our order, and offer desserts. By Behavioral
Economics’ explanation with this kind of thing, we could have a proper way of deciding
how to save up and intelligently manage our money. Lastly, Economics teaches us
how to create a household budget where we can know how to mitigate our money to
what is more essential goods we need in our house and what other things can give us
satisfaction or our wants.

To sum it up, we are surrounded by economics. It was able to help us to decide

on how we can be smart when it comes to handling our money; while being satisfied
with the things that we have. It helps us maximize the things we have and use them
properly to survive and be more aware of what we can have for our wants and needs.
 B. Exercise

I.

• The term “micro” and “macro” just means that the microeconomics focuses on
the tiny scales that can be easily identified, such as the household expenses
within the market. At the same time, macroeconomics manages the large
scales such as the nation’s gross productions of goods and its income.

MICROECONOMICS MACROECONOMICS

Focuses on consumer’s choices and Studies the nation’s economic state and
economic unit its other factors
Deals with an individual’s income, Deals on national income, output, and
output, price of products, etc. general price levels
Solves issues on the allocation of Focuses on worldly matters such as
resources and Price Discrimination employment and national household
income
Tackles Consumer Behavior, whether an Tackles effects of Globalization and
individual or group Trading
It helps to determine equilibrium can be Determines a country’s equilibrium level
achieved at a small scale on its employment and income

II.

• Positive Statements
- Monopolies are verified to be inefficient
- There is an increase in the production of rice during a particular season
- A fall in the supply of beef will increase its price.
- House prices reduce when the interest rate on loans increases
 • Normative Statements
- The Government should focus more on allocating proper budget towards
the production of petrol.
- An Individual should be knowledgeable on their consumer rights
- Every seller should be accountable for any unlawful acts
- The Government should increase the wages of every farmer to help them
have a sustainable living.

III.

• Classical Economics

Economics became an independent and more academic pursuit, away from

finance, governance, and philosophy. Adam Smith studied how the world was
operating to increase the wealth of a country. This era was ruled by mercantilism, an
economic law created to maximize exports and minimize the imports of an economy.
It was flawed for that time, and the system resulted in hoarding goods, especially gold,
mining within the territory or colonies, or plundering through hostile conflict. It was only
valuable for some nations with an economic success that revolved to the strength of
the harvest and claiming other nations’ territory. Industrialism blossomed after Adam
Smith was able to write the wealth of the nations. And it is where wealth was not being
grown but being made, which resulted in many people becoming wealthy.

This era gave economics a foundation that was able to help establish market
and labor. Being able to earn money by working in factories and the market was a way
for people to have an income to sustain their needs and make purchases, which makes
the primary and most evident thing that we can see in today’s economy. It built a strong
pillar in the economy where buying and selling and working to fulfill our interests and
ease people’s satisfaction.
 • Austrian Economics

Carl Menger was the father of Austrian Economics and contributed to the
marginal Utility theory with his student, Friedrich Von Vieser. Margin Utility was an
essential contribution to economics, for it means that goods or products provide utility.
Still, their utility decreases for every extra number of goods or products consumed,
and that’s where the Subjective Theory of Value comes in. It states that products are
not worth the sum of materials and labor but worth of function of its significance. It
gave producers an idea that the vital thing is how many someone can produce but
instead what to manufacture.

Austrian thought influenced our economy today, where the consumers became
workers for the market and someone who could contribute to the economy. Then it
created a lot of conflict for consumers might sometimes get irrational, so giving them
liberty might not be a good idea. Economics needs a detailed explanation, for it is still
science. Therefore, it needs not just only what people think but also requires research
and proper analysis. And by that, we were able to use these lessons in our times to
be more detailed in making decisions for our economy while also giving the people the
voice, for they are the ones who will also benefit the economy.

• Keynesian Economics

John Maynard Keynes is an influential economist of the 20 th century. He

introduced the counter-cyclical fiscal policy where it measures which counteract the
effects of the economic cycle. Some consumers became the center of the modern
economy, and their sentiment impacted the economy more than other aspects such
as calamities, war, or plagues. Keynes’ “The General Theory of Employment, Interest,
and Money” was able to show more balanced transactions of the consumer and the
market by having taxations while also giving the consumers the freedom for them to
have their leisure.
 This thought is still being used today, for this is very applicable to what we are
experiencing today. Because of having taxes, countries could have a budget that can
save the economy when a recession will happen and other calamities. And as we
experience a current pandemic, the role of our tax is supposed to be a budget to create
balance to an economic state. And this thought is helpful to begin with if we could
implement it properly. We investigate the events of our country, and our financial
condition drops low because of this pandemic, even though the people pay their taxes.
If there are no people who can create a responsible call for allocating budget, then this
thought would only come to waste.
 C. Reflection

Economics is significant in our lives, for it is a driving tool that helps us sustain
ourselves. It can create a way for us to have another language that can help us
understand how we can utilize the limited resources to fulfill our unlimited needs and
wants. And it became a tool for us people to have a better understanding of how we
can be able to have proper decision making in our lives.

If we look around in our life, economics is the way of our living. We can use its
principles not only in monetary aspect, but it was also a way for us to create proper
decision-making in our choices in life. And the fact that it all comes down to demand
and supply seems so simple, but it has a significant impact on our life. We can
determine the things that we need to survive and continue the economic cycle that we
are pursuing now. And since the pandemic, economics was able to help me to be more
aware of what I should need and what is unnecessary. Being wise to our decisions,
especially when it comes to our finances, we can better use our resources properly.
By learning the fundamental theories in economics, such as the opportunity cost and
marginal utility, I understood how I could gain something when I sacrifice the things
that I can offer. And, to see that having too much or less is something that I should
avoid, only have things that will give us a suitable amount of satisfaction.

To be able to recognize the importance of economics in our lives is an excellent

start to have a proper way on how we can be able to make our decisions for ourselves.
We must know that it can help us take a giant leap to a better future for our own and
our country. Every little thing that is part of economics will create an enormous impact
on society.
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