ECONOMICS DEVELOMENT

Activity I- Introduction

1. Suppose your friend is strong on defense and insists that we must bolster our national defense,
whatever the cost. How can you use your economic logic make him or her aware of the
opportunity costs associated with his or her objective?

Let us define first what opportunity cost means. According to this link, Shopify, an
opportunity cost is an economics term that refers to the value of what you have to give up in
order to choose something else. In a nutshell, it’s a value of the road not taken.
https://www.shopify.com/encyclopedia/opportunity-cost)

Another term need to define is the word “bolster”. According to Merriam Dictionary,
bolster means to make (something) stronger or better; to give support to (something).

The Department of National Defense fulfills its mandate to serve and protect the Filipino
people, to protect the State and to ensure security and peace where the sovereignty of the
Philippines is present. (https://www.officialgazette.gov.ph/history-the-department-of-national-
defense/) It is indeed significant to bolster our national defense especially nowadays that we are
facing different challenges as a state. But having the phrase “whatever the cost” is different. We
should consider a lot of things before doing such actions that may affect the lives of many
Filipinos.

My friend’s intention is of course good and is helpful to our country. But using my
economic logic, I will try my very best to make her realize the consequences of the action she
wanted to imply. If she will push it, the government might focus on that thing only and will pay
less attention to the other things they need to pay attention to. Just like for examples, the
education, the health and many other problems that our country needs to fix first. In addition,
bolster our national defense will cost as too much, of course. We will need a huge amount
money for our funds and buying some things we will be needing such as fighter planes, canons,
different kind of guns and such. Imagine sacrificing several other things just because of bolsting
our national defense.

2. Unemployment imposes serious hardships on –out-of- work individuals and their families. What
are the costs of unemployment to society as a whole? (Keep in mind the production possibilities
curve).

There are a lot of costs of unemployment in different aspects. There is this Cost to the
individual. When you are unemployed, of course you have no money to buy the things that you
need and you want. Cost to society. Because of being unemployed, people might do the wrong
ways (crimes) just to fulfill their needs and wants which makes the society at risk. Cost to the
country. Unemployment leads to higher payments from state and federal governments for
 unemployment benefits, food assistance, and health. (https://www.investopedia.com/financial-
edge/0811/the-cost-of-unemployment-to-the-economy.aspx)

A production possibility curve measures the maximum output of two goods using a fixed
amount of input. The input is any combination of the four factors of production: natural
resources (including land), labor, capital goods, and entrepreneurship. The manufacture of most
goods requires a mix of all four. Each point on the curve shows how much of each good will be
produced when resources shift from making more of one good and less of the other.

3. Why, in rich nation, is it important that we fully use our resources and technology to maximize
our nation’s input? Is it only the level of total output that is important, or are the types of
output that we produce also important? Do you think that the distribution of this output is just
as important as its total amount?

Most of the time, an entrepreneur starts off as a small start-up with limited resources
and a lot of constraints. Compared to other big and established companies, the need to
maximize your resources and minimize your risks becomes even greater. Being able to maximize
your resources properly will go to great lengths in ensuring your company’s steady growth.
(https://www.under30ceo.com/maximizing-your-resources-and-minimizing-your-risks/)

The resources that we have with us might be useless if we will not use it and maximize
it. It is significant to maximize these because it could benefit us and of course our own country.
Maximizing our resources means using it well for the betterment of each and every one.

It is both the level of total output and the types of output that we produce that is
important. Imagine producing a large amount of your products having a high quality. Isn’t it the
best? Many individuals and companies will come to you and will use that product. So it should
be balance.

4. Do you think our nation’s output should be distributed according to income or according to
some other standard (such as basic human need)?

According to Wikipedia, in economics, distribution is the way total output, income,

or wealth is distributed among individuals or among the factors of production (such
as labour, land, and capital). In general theory and the national income and product accounts,
each unit of output corresponds to a unit of income. One use of national accounts is for
classifying factor incomes and measuring their respective shares, as in national Income. But,
where focus is on income of persons or households, adjustments to the national accounts or
other data sources are frequently used. Here, interest is often on the fraction of income going to
the top (or bottom) x percent of households, the next x percent, and so forth (defined by equally
 spaced cut points, say quintiles), and on the factors that might affect them (globalization, tax
policy, technology, etc.). (https://en.wikipedia.org/wiki/Distribution_(economics)

Nation's output refers to goods and services produced in the country.

Output should be distributed according to the income of people rather than according
to their basic requirements. This is because distributing according to the income will be fair for
every individual; people will get what they can afford.

Distributing according to basic needs will be unfair because basic needs will vary
according to different individuals. Basic requirements for a rich will be a luxury for poor, and
hence, there will be an unequal distribution of nation's output. (study.com)

5. Does the efficiency of the price mechanism ensure that our market-based economy is an
equitable one? Why or why not?

Price mechanism refers to the system where the forces of demand and supply
determine the prices of commodities and the changes therein. It is the buyers and sellers who
actually determine the price of a commodity.
(https://economictimes.indiatimes.com/definition/price-mechanism)

I think no. Because just like what happen recently about the face masks being in
demand all around the Philippines. It is highly in demand, so the price should also increase. But
it shouldn’t because it is being in demand because of a natural disaster that we all didn’t expect
to happen. And doing it shows no love and care to our fellow Filipinos. Another thing is the nCov
that is said to be spreading. Masks are also being in demand because of that, but again that
doesn’t mean that the price will increase to follow the rule.

6. Find a good example of economic joke and share it with the rest of the class.

 How many economists does it take to change a lightbulb? None. The invisible hand
will do it for them.
 You might be an economist if you divide your relatives into two columns — assets
and liabilities.