T.R. YANGCO CATHOLIC
EDUCATIONAL INSTITUTE,INC.
SAN JUAN, SAN ANTONIO,
ZAMBALES
S.Y. 2022-2023
GRADE 12- ABM-GAS
APPLIED ECONOMICS
Lesson 1: Revisiting Economics as a
social science
What is economics? - derived from
Greek word “Oikanomia”
- Economics, as a
study, is the social science that involves
the use
of scarce
resources to satisfy unlimited wants.
SCARCITY
- Scarcity is the reason why people have
to practice economics. Scarcity is a
condition where there are insufficient
resources to satisfy all the needs and
wants of a population.
 Relative scarcity is when a good is
scarce compared to its demand.
 Absolute scarcity is when supply is
limited.
- Opportunity cost refers to the value of
the best forgone alternative. The concept
of opportunity cost holds true for
individuals, businesses, and even a
society.
ECONOMIC RESOURCES
Economic resources, also known as
factors of production, are the resources
used to produce goods and services.
1. Land – soil and natural resources that
are found in nature and are not manmade. Land is considered an economic
resource because it has a price attached
to it. Owners of land receive a payment
known as rent/lease.
2. Labor – also called “human
resources”, refers to all human efforts,
be it mental or physical, that help to
produce satisfying goods and services.
The income received by labors is
referred to as wage and salaries.
3. Capital
Two
economic
definitions of capital:
a. Capital – can represent
the monetary resources use to
purchase
natural resources
b. Capital – represents
the major physical assets
individuals and
companies use when
producing goods and services.
4. Entrepreneurs - French word which
means “enterpriser”
- Entrepreneur organizer
and coordinator of other factors
of production: land, labor and
capital.
5. Foreign Exchange - refers to the
dollar and dollar reserves that the
economy has. Foreign exchange is part
of economic resources because we need
foreign currency for international
trading and buying materials from other
countries
2 BRANCHES OF ECONOMICS
Microeconomics- deals with the
economic behavior of the individual
units such as consumers, firms, the
owners of factors of production. It also
concerned with the process of setting
prices of goods that also known as Price
Theory.
Macroeconomics- economy as a whole
economy or its aggregate such as
government, business, unemployment,
inflation, and the like. Refers to
management of income, expenditures,
wealth, resources of a nation.
Divisions of Economics
1. Production – refers to the process of
producing or creating goods needed by
the households to satisfy their needs. It
is the use of inputs to produce outputs.
2. Distribution- is the allocation of the
total product among members of society.
It is related to the problem of for whom
goods and services are to be produced.
3. Exchange – refers to the process of
transferring goods and services to a
person in return for something present
medium of exchange – money
4. Consumption - is the use of a good
or service. Consumption is the ultimate
end of economic activity. WHEN
THERE IS NO CONSUMPTION,
THERE WILL BE NO NEED FOR
PRODUCTION AND DISTRIBUTION.
Refers to the proper utilization of
economic goods.
5. Public Finance - is concerned with
government expenditures and revenues.
Economics studies how the government
raises money through taxation and
borrowing.
Lesson 2: Economics as an Applied
Science
Applied economics - is the study of
economics in relation to real world
situations. It is the application of
economic principles and theories to real
situations and trying to predict what the
outcomes might be.
What is the importance of applied
economic application?
1. Applying economics to a company,
household or a country helps sweep
aside all attempts to dress up a situation
so that it will appear worse or better than
it actually is.
2. Applied economics acts as a
mechanism to determine what steps can
reasonably be taken to improve current
economic situation.
3. Applied economics can teach
valuable lessons on how to avoid the
recurrence of a negative situation, or at
least minimize the impact.
Lesson 3. ECONOMETRICS
What is econometrics?
Econometrics – is the application of
statistical and mathematical theories to
economics for the purpose of:
-Testing hypotheses
- Forecasting future trends
The results of econometric are compared
and contrasted against real life examples.
The fundamental economic problem is
the issue of scarcity but unlimited wants.
Scarcity implies there is only a limited
quantity of resources, e.g. finite fossil
fuels. Because of scarcity, there is a
constant opportunity cost – if you use
resources to consume one good, you
cannot consume another. Therefore, an
underlying feature of economics is
concerned with dealing how to allocate
resources in society to make the most
efficient and fair use of resources.
The main issues are:
Goods and services are used extensively
in economic discussions that these are
sometimes referred to as economic
goods. To distinguish the term from its
other uses, economic goods cover goods,
services, products, and the like that have
a price and are sold in a market.
WHAT TO PRODUCE?
This first question relates to resources. If
there is an abundant supply of labor in
the society, then the society will
consider labor intensive products or will
focus on providing services instead of
manufacturing goods. Additionally,
availability of resources influences the
decision on what to produce. Consider
two clothes manufacturers for instance.
One uses abundant local fabric, and the
other uses imported and hard-to-source
materials. The manufacturer that utilizes
the readily available local fabric would
incur less cost.
The system must determine the desires
of the people.
Goods and services must be based on the
needs of the consumers
Factors to consider:
HOW MUCH TO PRODUCE?
This question focuses on the actual
production of goods and services and the
allocation of resources. In terms of
resources, a business has to decide on
certain issues such as how much to
invest, how many people to hire to
produce the goods or services and how
much raw materials to obtain. The
question, therefore pertains to the inputs
of production.
FOR WHOM TO PRODUCE?
The final question focuses on the
distribution and consumption of goods
and services. Is the good or
services for end consumers of for other
business for further production? Does it
address a need or a want?
This has something to do with
distribution. Once the goods are
produced, how shall they be distributed?
HOW TO PRODUCE?
The system must select the proper
combination of economic resources in
producing the right amount of output.
The quality of output must come first
before the quantity.
ARE
THE
COUNTRY’S
RESOURCES BEING UTILIZED
OR SOME OF THEM ARE LYING
IDLE AND UNEMPLOYED?
When resources are scarce, it is
absolutely not right to keep some of the
available ones idle. If resources are not
fully utilized, the production system is
said to be inefficient.
IS THE ECONOMY’S CAPACITY
TO PRODUCE GOODS GROWING
OR REMAINING THE SAME
OVERTIME?
To achieve a growth is productive
capacity is a universal objective. These
questions are considered along with
other business-related factors such as
marketability and pricing.
Examples of economic problems
include
costs/pollution,
production.
e.g.
pollution
from
come to reduce
poverty, without causing loss of
economic incentives.
street-lighting) which are usually not
provided in a free market.
welfare? Is it wrong to focus on output
and income? (as economics has in the
past) – New measures of economic
welfare try to include broader range of
factors, such as environment, education,
health care.
Major economic problems in the
Philippines are very similar to the
economic
problems
in
other
underdeveloped countries. Some of the
major pinpointed problems are the
import-export imbalance, causing those
who specialize in trade and make their
living off of imported and exported
goods to lose money. The imbalance
causes families that are forced to survive
off of this small income to wonder if
they are going to eat the next week or
not.
Sectors and their economic problem on
1. Consumers
Households have limited income and
they need to decide how to spend their
finite income. For example, with an
annual income of £20,000, a household
may need to spend £10,000 a year on
rent, council tax and utility bills. This
leaves £10,000 for deciding which other
food, clothes, transport and other goods
to purchase.
2. Workers
Householders will also face decisions on
how much to work. For example,
working overtime at the weekend will
give them extra income to spend, but
less leisure time to enjoy it. A worker
may also wish to spend more time in
learning new skills and qualifications.
This may limit their earning power in
the short-term, but enable a greater
earning power in the long-term. For
example, at 18 a student could go
straight into work or they could go to
university where they will hope to gain a
degree and more earning power in the
long-term.
3. Producers
A producer needs to remain profitable
(revenue higher than costs). So it will
need to produce the goods which are in
high demand and respond to changing
demands and buying habits of
consumers – for example, switching to
online sales as the high street declines.
Producers will need to constantly ask the
best way of producing goods. For
example, purchasing new machines can
increase productivity and enable the
firms to produce goods at a lower cost.
This is important for fast-changing
industries where new technology is
frequently reducing costs of production.
Without firms adapting to how they
produce, they can become unprofitable.
Firms may also need to make long-term
investment decisions to invest in new
products and new means of production.
4. Government
The government has finite resources and
its spending power is limited by the
amount of tax that they can collect. The
government needs to decide how they
collect tax and then they need to decide
whom they spend money on. For
example, the government may wish to
cut benefits to those on low income to
increase incentives to work. However,
cutting benefits will increase inequality
and relative poverty. Applied economics
applies the conclusions from economic
theories and econometrics in dealing
with practical economic issues. A solid
understanding of economic principles
and how they are applied in real life
situations can serve as tools to address
economic problem of a country.
Lesson 4. Basic economic problems
and the Philippines
In the 21st century, the Philippines has
been faced with several economic
problems such as the following:
A. UNEMPLOYMENT
According to the official website of
Philippine Statistics Authority (2004),
unemployment includes all persons who
are 15 years and over and are reported
as : (1) without work and currently
available for work and looking for work;
or (2) without work and currently
available for work but not looking for
work due to the following reasons:
a.Tired/believed no work available
b.Waiting results of previous job
application
c.Temporary illness/disability
d.Waiting for rehire/job recall
COMMON CAUSES

the job market has been greater than
the number of jobs created.

-urban migration
increases due to employment
opportunities.

individuals are college graduates.
WHAT CAN BE DONE TO SOLVE
UNEMPLOYMENT PROBLEM?
 Appropriate economic policies for
labor-intensive industries.
 Improve the educational system of
the country especially in the rural
areas
 Minimize rural-urban migration by
improving
the
economic
environment in rural areas.
 Proper
coordination
between
government and the private sector to
solve the problem of job mismatch.
 Slowing
population
growth.
Philippine growth must increase
faster than the population. Limit the
size of families.
 Provision of more investment
opportunities to encourage local and
international investment.

Unemployment is the main
problem of the Philippine economy. As
reported by the Philippine Statistics
Authority, the unemployment rate rose
to 17.7 % accounting for 7.3 million
unemployed Filipinos in the labor force
in April 2020 due to the effects of a
pandemic (Coronavirus disease 2019)
economic shutdown to the Philippine
labor market. The unemployment rate in
January 2020 was 5.3 % while 5.1 % in
April 2019.
B. POVERTY
It refers to the state or condition in
which people do not have the minimum
standard of life deemed accepted by
society.
As reported by the National Statistics
Authority, the 2018 poverty incidence
among population or the proportion of
poor Filipinos whose per capita income
is insufficient to meet their basic food
and non-food needs are now estimated at
16.7% or about 17.7 million Filipinos
living in poverty in 2018.
Common causes of poverty:
1.Increase in population
2.Increase in the cause of living
3.Unemployment
4.Income inequality
The best predictor of whether a family is
poor is whether someone in that family
has a job. If no one in the family has a
job, the family is more likely to be poor.
Thus, the most direct way the
government can help reduce poverty is
to nurture a healthy economy. Strong
economy means better job opportunities.
WHAT CAN BE DONE TO SOLVE
THE POVERTY PROBLEM?
 Reduce unemployment
 Appropriate policy on labor income
 Provision of unemployment benefits
for those who will be unemployed
due to natural or man-made
calamities.

Increase social services like
education, health care and food
subsidies for sustainable poverty
reduction.
Appropriate policy on labor income.
C. POPULATION GROWTH
The booming population growth in the
Philippines can be connected to the issue
of scarcity.
Economic resources may not be
sufficient to support the growing
population. As reported the population
of the Philippines as of August 1, 2015
was 100,981,437, based on the 2015
Census of Population (POPCEN 2015).
Compared with population of 92.34
million in 2010, the 2015 population is
higher by8.64 million. The Census of
Population aims to provide government
executives, policy and decision makers,
and planners with updated population as
bases for social and economic
development plans, policies, and
programs at the national and local levels.
The country’s problems may vary with
times and circumstances. It is a
challenge to us to observe and identify
what these problems are.
D. INCOME INEQUALITIES
Income is the money that an individual
earned from work or business received
from investments.
Income inequality – refers to the gap in
income that exists between the rich and
the poor.
MAJOR CAUSES OF INCOME
INEQUALITY
Political culture
na loob”
Ex. Voting for the wrong person during
election
Indirect taxes – poor people shoulder
this taxes like the Value Added Tax – 12%
WHAT CAN BE DONE TO SOLVE
THE PROBLEM OF INCOME
INEQUALITY

Policies to enforce progressive rates
of direct taxation on high wage
earners and wealthy individuals.
 Direct
money transfers
and
subsidize food programs for the
urban and rural poor.
 Direct government policies to keep
the price of basic commodities low
 Raise minimum wage
 Encourage profit sharing
Chapter 2. APPLICATION OF
SUPPLY AND DEMAND
Lesson
1. DEFINITION
AND
DETERMINANTS OF DEMAND
AND SUPPLY
The quantity demanded of a
good or services is the number of units
that all buyers in a market would choose
to buy over a given time period, given
the constraints that they face. The
quantity an individual demand may be
determined
by
the
following
determinants.
1. Price – the quantity demanded
falls as the price rises and rises as the
price falls. Therefor quantity demanded
is negatively related to the price of the
good.
2. Income – the quantity
demanded for a good fall when income
falls, this is true for normal goods,
which is defined as a good for
which, other things equal, an increase
in income leads to an increase in
demand.
3. Tastes – the most obvious
determinant of demand is taste. If an
individual likes a good, the greater is
his demand for it.
4. Expectations – Expectations
about the future may affect the
demand for a good or services today.
5. Number of buyers – More
buyers means an increase in quantity
demanded and less buyers mean lesser
quantity demanded.
6. Prices of Related Goods –
Accordingly, there are two kinds of
related goods, substitutes which are
often used in place of another good
and complements which are often
used along with another good.
The quantity supplied of any
good or services is the amount that
sellers are willing and able to sell. The
quantity a producer supplies may be
determined
by
the
following
determinants:
1. Price – the quantity supplied
falls as the price falls and rises as
the price rises. Therefor quantity
supplied is positively related to
the price of the good.
2. Taxes – Certain taxes increase
cost of production. Higher taxes
discourage production because it
reduces
the
earnings
of
businessmen.
3. Number of sellers – More
sellers or more factories means
an increase in supply and less
sellers or factories mean less
supply.
4. Input Prices – when the price
of one or more inputs rises,
producing a product becomes
less profitable. If the price of one
or more inputs falls, producing a
product becomes more profitable.
5. Technology – The technology
for turning inputs into a good is
yet another determinant of
supply.
6. Expectations – The amount of
goods being supplied today may
depend on the expectations of the
future.
THE LAW OF DEMAND AND
SUPPLY
* Law of Demand
“the quantity of a commodity
which buyers will buy at a given time
and place will vary inversely with
the price.” This means that as prices
increases, quantity demanded decreases,
and as price decreases, quantity
demanded increases other things are
constant.
*Law of Supply
simply means that the quantity
offered for sale will vary directly with
the price. This means that as price
increases, quantity supplied also
increases; and as price decreases,
quantity supplied also decreases.
CETERIS PARIBUS ASSUMPTION
Economist use the term ceteris
paribus to signify that all relevant
variables, except those being studied at
the moment, are held constant. This
Latin phrase literally means “other
things being equal”. Whenever you see
a demand or supply curve, remember
that it is drawn holding many things
constant.
DEMAND
AND
SUPPLY
SCHEDULE
Demand Schedule reflects the
quantities of goods and services
demanded by a consumer or an
aggregate of consumers at a given price.
Supply Schedule shows the
different quantities that are offered for
sale at various prices. The supply
schedule may reflect individual schedule
of only one producer or the market
schedule showing aggregate supply of a
group of sellers or producers.
DEMAND AND SUPPLY CURVE
The demand and supply schedule
can also be understood through
graphical illustration known as the
demand and supply curve. In many
instances, it is more convenient to
express the relation between prices and
quantity demanded and quantity
supplied by means of a graph.
CHANGE
IN
QUANTITY
DEMANDED AND QUANTITY
SUPPLIED
Changes in the quantity
demanded indicate the movement from
one point to another point. This means,
that the demand curve does not change
its position. The change in quantity
demanded is brought by changes in
price. Whenever there is a change in
price, there is a corresponding change
in quantity demanded.
Changes in quantity supplied
show the movements from one point to
another point in a constant supply curve.
Changes in quantity supplied is brought
about by change in price.
CHANGE IN DEMAND AND
SUPPLY CURVE
Changes in demand curve
refer to the shift of demand curve
which is brought about by changes
in the determinants of demand, except
PRICE. In a graph, an increase in
demand shifts the demand curve to the
right while a decrease in demand shifts
the demand curve to the left.
Changes in supply refer to the
shift of supply curve which is brought
about by changes in the determinants of
supply, except PRICE. In a graph, an
increase in supply shifts the supply
curve to the right while a decrease in
supply shifts the supply curve to the left.
MARKET EQUILIBRIUM
In the market, supply and
demand interact freely. Supply is
represented by producers or sellers while
demand is represented by the buyers.
In the process of interaction between
buyers and sellers, an equilibrium
price and equilibrium quantity or
market equilibrium is established. The
equilibrium price and equilibrium
quantity are values for price
and
quantity in the market that, once
achieved, will remain constant – unless
and until the supply curve or the demand
curve shifts.
Above the equilibrium price is a
SURPLUS and below the equilibrium
price is a SHORTAGE. In the process
of interaction between buyers and sellers,
prices tend to move towards the
equilibrium price (Pe) at the equilibrium
quantity (Qe).
Lesson 2. Elasticity of Demand and
Supply
Elasticity
measures
the
sensitivity of one market variable to
another or in other terms a measure of
the
responsiveness
of
quantity
demanded or quantity supplied to one
of its determinants.
Accordingly, there are three measures of
elasticities. They are the following:
1. Price Elasticity – a measure of how
much the quantity demanded or supplied
of a good respond to a change in price of
that good.
2. Income Elasticity – a measure of
how much the quantity demanded or
supplied of a good respond to a change
in consumers’ income
3. Cross-price Elasticity – a measure of
how much the quantity demanded or
supplied of a good respond to a change
in the price of another good.
PRICE ELASTICITY
The price elasticity of demand measures
how much the quantity demanded
responds to a change in price. Demand
for a good is said to be elastic if the
quantity
demanded
responds
substantially to changes in the price.
What determines whether the demand
for a good is elastic or inelastic?
Because the demand for any good
depends on consumer preferences, the
price elasticity of demand depends on
the many economic, social, and
psychological
forces
that
shape
individual desires.
Necessities versus Luxuries Necessities
tend to have inelastic demands, whereas
luxuries have elastic demands. When the
price of a visit to the doctor rises, people
will not dramatically alter the number of
times they go to the doctor, although
they might go somewhat less often. By
contrast, when the price of sailboats
rises, the quantity of sailboats demanded
falls substantially. The reason is that
most people view doctor visits as a
necessity and sailboats as a luxury.
Availability of Close Substitutes
Goods with close substitutes tend to
have more elastic demand because it is
easier for consumers to switch from that
good to others. For example, butter and
margarine are easily substitutable. A
small increase in the price of butter,
assuming the price of margarine is held
fixed, causes the quantity of butter sold
to fall by a large amount.
Definition of the Market The
elasticity of demand in any market
depends on how we draw the
boundaries of the market. Narrowly
defined markets tend to have more
elastic demand than broadly defined
markets, because it is easier to find close
substitutes for narrowly defined goods.
Time Horizon Goods tend to have more
elastic demand over longer time
horizons. When the price of gasoline
rises, the quantity of gasoline demanded
falls only slightly in the first few months.
Over time, however, people buy more
fuel-efficient cars, switch to public
transportation, and move closer to where
they work.
COMPUTING
THE
PRICE
ELASTICITY OF DEMAND
Economists compute the price elasticity
of demand as the percentage change in
the quantity demanded divided by the
percentage change in the price.
THE MIDPOINT METHOD
In the extreme case of a zero elasticity,
demand is perfectly inelastic, and the
demand curve is vertical. In this case,
regardless of the price, the quantity
demanded stays the same. As the
elasticity rises, the demand curve gets
flatter and flatter. At the opposite
extreme, demand is perfectly elastic.
This occurs as the price elasticity of
demand approaches infinity and the
demand curve becomes horizontal,
reflecting the fact that very small
changes in the price lead to huge
changes in the quantity demanded.
Finally, if you have trouble keeping
straight the terms elastic and inelastic,
here’s a memory trick for you: Inelastic
curves look like the letter I. Elastic
curves look like the letter E.
COMPUTING
THE
PRICE
ELASTICITY OF SUPPLY
Economists compute the price elasticity
of supply as the percentage change in
the quantity supplied divided by the
percentage change in the price.
THE VARIETY OF SUPPLY
CURVES
Because the price elasticity of supply
measures the responsiveness of quantity
supplied to the price, it is reflected in the
appearance of the supply curve. In the
extreme case of a zero elasticity, supply
is perfectly inelastic, and the supply
curve is vertical. In this case, the
quantity supplied is the same regardless
of the price. As the elasticity rises,
the supply curve gets flatter, which
shows that the quantity supplied
responds more to changes in the price.
At the opposite extreme, supply is
perfectly elastic. This occurs as the price
elasticity of supply approaches infinity
and the supply curve becomes horizontal,
meaning that very small changes in the
price lead to very large changes in the
quantity supplied.
INCOME
ELASTICITY
OF
DEMAND
Economists use the income elasticity of
demand to measure how the quantity
demanded changes as consumer income
changes. The income elasticity is the
percentage change in quantity demanded
divided by the percentage change in
income.
It is known that most goods are
normal goods: Higher income raises
quantity demanded. Because quantity
demanded and income move in the
same direction, normal goods have
positive income elasticities. A few
goods, such as jeepney rides, are inferior
goods: Higher income lowers the
quantity demanded. Because quantity
demanded and income move in opposite
directions, inferior goods have negative
income elasticities.
CROSS-PRICE ELASTICITY OF
DEMAND
Economists
use
the
cross-price
elasticity of demand to measure how the
quantity demanded of one good changes
as the price of another good changes.
It is calculated as the percentage
change in quantity demanded of good 1
divided by the percentage change in the
price of good 2.
Whether the cross-price elasticity is a
positive or negative number depends on
whether the two goods are substitutes or
complements. As we previously
discussed, substitutes are goods that are
typically used in place of one another,
such as hamburgers and hot dogs. An
increase in hot dog prices induces
people to grill hamburgers instead.
Because the price of hot dogs and the
quantity of hamburgers demanded move
in the same direction, the cross-price
elasticity is positive.
LESSON 3: Compare the prices of
commodities and its impact on
consumers
Buyers and sellers play a
significant role in the marketplace. A lot
of studies have been published regarding
how demand and supply affect the
commodities prices. In this module, we
are more focused on discussing and
analyzing how the prices of different
commodities impact the consumers.
Prices of commodities can go up,
stabilized or go down. Learning an idea
of the basic knowledge on “how and
why” the price of good and services
increase and decrease in our country. It
widened your understanding on what are
the factors that affect the prices of
commodities and how this affects the
buying behaviour and purchasing power
of the consumers. Furthermore, there are
some activities that capture your interest
to better understand the lesson. These
activities will measure your decision
making and learning to approve
judgment in a particular situation. It will
also give you practical scenarios that
will help you in your buying decisions.
Price of basic commodities
Commence with of commodity is
any tangible item that can be bought and
sold. Like an oil, rice, fruits, vegetables
and meat. Price will be affected to the
demand of the commodity of the
consumers. When there will be rise of
price of chicken meat also there will
increase of price in a beef. It is called as
substitute goods. However, when there
is low stock of rice there will be higher
increase of price of a corn is it called as
complement goods. The basic prices of
commodities will be affected on supply
and demand of a particular good.
Talking about supply and
demand that if the price increases the
demand decreases while decreasing the
price if the supply increases. Demand is
the consumer what they needs however
supply is the product the consumer
needs.
Buying Behaviour of Filipinos
In term buying behaviour of Filipino
have
unique
characteristics
as
consumers since they buy a durable
product for long term used. It should be
suit up with their preferences, behaviour
brand loyalty, advertising and value of
money.
1.Preference – is the way it fit in to
his/her beauty, hygiene, health and
convenience.
2.Behaviour
brand loyalty
–
they prefer brand types of product.
4. Advertising –
commercial
affects preferences in buying products.
5. Value of money –
choosing affordable products.
Basic
commodities
vs.
Prime
Commodities
There are things that you want to buy
like cell phone, laptop, tablet,and any
gadgets you love to buy. Delicious food
you can buy in the mall and in the
market. You want to buy wonderful
dresses and stylist shoes. You want
expensive cars and motorcycle that fit y
our convenience. However there things
you buy for daily needs like rice, meat,
beef, fruit, and vegetable. Basic
commodities is different in prime
commodities, basic commodities is the
thing that you really need while prime
commodities the things you like to buy
for yourself.
Example:
Basic Commodities:
O Firewo3od
O Charcoal
O Cooking oil
O Salt
Prime Commodities
O Cell phone
O Cars
O Tablets
O Laptop
LABOR AND LABOR MIGRATION
Labor laws and regulations have
been devised to protect labor from
abuses by employers and to improve the
power of labor to bargain for decent
wages and working conditions. Practices
and regulations in the labor market are
focused on minimum wage mandates,
labor regulations concerning hiring and
firing of workers. Such practices have
their costs. They render the labor
market less flexible. For instance,
Philippine minimum wage policy has
been the object of a lot of attention
because, according to firms, government
minimum wage mandates have been
“high”. They were made to carry the
burden of raising wages from workers.
Aggressive minimum wage rates
increases have led to reduction in
employment,
making
households
dependent on wage incomes suffer
significant drops in their welfare, some
fall into poverty. The labor survey
showed
that
underemployment,
however, worsened from 17.9% to
19.7%. Underemployed persons are
those who are hired but who want more
work., thus several Filipinos tend to
leave the country to work abroad.
According to the Philippine Statistics
Authority (PSA) the number of Overseas
Filipino Workers (OFWs) who worked
abroad at any time during the period
April to September 2015 was estimated
at 2.4 million. Overseas Contract
Workers (OCWs) or those with existing
work contract compromised 97.1 percent
of the total OFWs during the said period.
LESSON 3: Effects of contemporary
issues such as migration,fluctuations
in exchange rate, oil price increases,
unemployment,peace and order, etc.
on the purchasing power of the people.
What is Purchasing Power?
Purchasing power
is the equivalent rate of a currency
expressed in terms of the value of goods
or services that a unit of money can buy.
Price increases reduce the purchasing
power of money that in turn has an
adverse impact on consumers' welfare. It
is vital because, all else being equal,
inflation decreases the amount of
products or services you would be able
to purchase. Purchasing power of people
is always affected in a community with a
contemporary issue such as migration,
unemployment,fluctuation
in
the
exchange rate, peace and order, etc.
Migration
Economic migration forms a large part
of the reason why people migrate.
Discretions to transfer can be influenced
by high poverty in the country or area of
origin. Through the social systems,
people receive information from people
who already migrated to other cities or
countries. Labor migration is a term
used which refers to people with
Filipino citizenship who reside in
another country for a restricted period of
employment.
In the long term, both high and lowskilled workers who migrated to other
country increases the purchasing power
and they have extra disposable income.
Thus, they afford sending their children
to reputable school with a quality
education and bringing good life to the
family.
The jobless person will have less
purchasing power, and less disposable
income. Thus, for people with the little
means of living, they will also adjust
their spending. They will look forward
to any opportunity of help from others
and limiting their purchasing power not
same good as before. Lastly people
having no means at all they will become
more aggressive and worried from
coming opportunities in life.
Fluctuations in exchange rate
The value of the exchange rate is
important in creating national policies
especially in open economies. It is also
important in guiding the exporting and
exporting of a country.For example, the
Philippine peso (PHP) in a United States
dollar (USD) in 2018 was almost
P53.1424 per $ 1. The peso rate of a
Japanese yen (JPY) in 2018 was almost
P0.46787 per ¥ 1. The pesos rate of
Thailand (baht) in 2018 was almost
1.6259 per TBH.Under the fixed
exchange rate, the exchange rate may
also decrease.This event is called a
devaluation where the local currency
amount of currency is decreasing in
other countries. This is contrary to
revaluation where the value of local
currency in other countries is increasing.
In these cases, there may be devaluation
or revaluation only if the government
announces it.
Greater prices lead to a diminishing in
the purchasing power of a dollar. As a
result, buyers often adjust their
purchasing behavior and spend less of
their disposable income. This effect of
decreased purchasing power lead to a
decrease in overall consumer spending
around the country.
Oil Price Increases
During big-time oil price increases in
the country, you can hear everyone
complaining about how harder it will be
to make ends meet. Some will go to the
extent of politicizing the price increase
just to be able to throw some blames to
the President. It’s more than a peso
increase
per
liter.
People
are
complaining because whenever there is
an increase in gasoline there is a
tendency of decreasing purchasing
power and spend less on the disposal of
income.
Peace and Order
Peace and order is a vital element in
maintaining
economic
development,social order and political
firmness. Through the help of the
executive orders of the government, it
helps in maintaining social order,
political stability. A condition of peace
and order enables the growth of funds,
generates
more
employment
opportunities and attracts more tourists.
Peace is the absence of aggression and is
characterized by healthy social and
international connections, fairness and
parity.
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