College of Business Education
First Semester, A.Y. 2025-2026
MODULE 1
Resource Utilization and Economics
Introduction
This module entitled Resource Utilization and Economics will give you a taste on what is
economics all about.
Date and Time Allotment
TBA
I. Objectives
At the end of the lesson the students should be able to:
• Define economics
• Describe the mechanics of the circular flow model.
• Apply the concept of opportunity cost.
• Answer the three basic economic questions.
• Distinguish positive economics from normative economics and microeconomics from
macroeconomics.
II. Lecture
Economics
• Allocation of scarce resources to satisfy the unlimited needs and wants of a society.
• The study of how society manages its scarce resources.
Scarcity
• The limited nature of society’s resources.
Circular flow-model/diagram
• An illustration showing the flow of resources from households to firms and of products
from firms to households. These flows are accompanied by reverse flows of money from
firms to households and from households to firms.
Prepared by:
Rhoda D. Calacsan
Opportunity cost
• The amount of other products that must be forgone or sacrificed to produce a unit of
product.
• Whatever must be given up to obtain some item.
Basic Economic Questions
• What to produce?
• How to produce?
• For whom to produce?
Positive economics
• Statements that describe the world as it is, without making any value judgments.
• They are based on objective facts, and they can be proven or disproven.
Example:
• The demand for a good will increase if its price decreases.
• An increase in the minimum wage will lead to a decrease in employment.
Normative economics
• It is based on value judgments, typically contain the keywords such as “should” and
“ought”.
• Claims that attempt to prescribe how the world should be.
Example:
• Women should earn the same salary as men.
• People should drive electric cars instead of consuming fossil fuels.
Microeconomics
• The part of economics concerned with decision making by individual units such as a
household, a firm, or an industry and with individual markets, specific goods and
services, and product and resources.
• The study of how households and firms make decisions and how they interact in
markets.
Macroeconomics
• The part of economics concerned with the economy as a whole; with such major
aggregates as the household, business, and government sectors; and with measures of
total economy.
• The study of economy-wide phenomena, including inflation, unemployment, and
economic growth.
III. Application/Activity
Answer the following:
1. Name a way that your family interacts in the factor market and a way that it interacts in
product market.
2. Draw a circular-flow diagram. Identify the parts of the model that correspond to the flow
of dollars for each of the following activities.
a. Selena pays a storekeeper Php50.00 for a quart of milk.
b. Stuart earns Php400.00 per hour working at a fast-food restaurant.
c. Shanna spends Php2,000.00 to get a haircut.
d. Salma earns Php100,000.00 from her 10 percent ownership of ACME Industrial.
Prepared by:
Rhoda D. Calacsan
IV. Assessment
Identification: Give what is being asked. Write your answer on the space provided.
_________________________1. An illustration showing the flow of resources from households
to firms and of products from firms to households.
_________________________2. The cost of other products that must be forgone or sacrificed to
produce a unit of product.
_________________________3. Statement claims that attempt to describe the world as it is.
_________________________4. The study of economics at an individual, group, or company
level.
_________________________5. Statement claims that attempt to prescribe how the world
should be.
_________________________6. The one who owns and sell factors of production.
_________________________7. Who buy and consume goods and services?
_________________________8. Where do firms buy factors of production?
_________________________9. The one that produce and sell goods and services.
_________________________10. They hire and use factors of production.
V. Other References
• Mankiw, N.G., (2018). Principles of Economics. 8th ed. USA: Cengage Learning
• McConnell, C.R., et. al. (2018). Economics: Principles, Problems and Policies. 19th ed.
New York, USA: McGraw/Hill Companies, Inc.
• Manapat, et.al., (2016). Economics, Taxation and Agrarian Reform. Quezon City,
Philippines: C&E Publishing, Inc.
• Nagar, P., (2023). The ABC of Microeconomics. 2nd ed. India: Exceller Books.
Prepared by:
Rhoda D. Calacsan
College of Business Education
First Semester, A.Y. 2025-2026
MODULE 2
Marginal Analysis and Evaluating Production Possibilities
Introduction
This module entitled Marginal Analysis and Evaluating Production Possibilities discusses
graphs, curves, and slopes as they relate to economics where limits, alternatives and choices
applied.
Date and Time Allotment
TBA
I. Objectives
At the end of the lesson the students should be able to:
• Identify the features of the economic perspective.
• Apply production possibilities analysis, increasing opportunity costs, and economic
growth.
• Differentiate absolute advantage from comparative advantage.
• Understand graphs, curves, and slopes as they relate to economics.
II. Lecture
Utility
• the want satisfying power of a good or service; the satisfaction or pleasure a consumer
obtains from the consumption of a good or service.
Marginal Utility
• The extra utility a consumer obtains from the consumption of 1 additional unit of a good
or service.
Law of diminishing marginal utility
• it is the added satisfaction declines as a consumer acquires additional units of a given
product.
Prepared by:
Rhoda D. Calacsan
Production possibilities frontier
• The production possibility frontier (PPF) is a curve on a graph that illustrates the possible
quantities that can be produced of two products if both depend upon the same finite
resource for their manufacture.
• The PPF is also referred to as the production possibility curve.
• The PPF demonstrates that the production of one commodity may increase only if the
production of the other commodity decreases.
Prepared by:
Rhoda D. Calacsan
Absolute Advantage
• The ability to produce a good using fewer inputs than another producer.
Example:
• Suppose Abby and Joe both own general stores and make products to sell in their
stores. Both sell homemade quilts. Abby can make a quilt using 5 square yards of fabric.
Joe needs 7 square yards of fabric to make a quilt of the same size. In this scenario,
Abby has an absolute advantage over Joe when it comes to making quilts — She can
produce the same number of quilts using less raw material.
Comparative advantage
• The ability to produce a good at a lower opportunity cost than another producer.
Example:
• A country that produces a large amount of oil charges a local chemical manufacturer
less to purchase their product since it is cheaper to sell the oil to them than export it
overseas. Since the chemical manufacturer is paying less for the materials they need to
produce chemicals, they can sell their finished products at a lower price than other
countries. This makes them more competitive in the chemical production industry.
Therefore, this company has a comparative advantage over other chemical production
companies.
What is the difference between absolute advantage and comparative advantage?
• An absolute advantage is when one country can make something at a lower cost than
another. Comparative advantage is when a nation can make something at a lower
opportunity cost than another.
III. Application/Activity
Multiple Choice: Encircle the best answer.
1. In an hour, Tom can wash the 2 cars or mow 1 lawn, and Jerry can wash 3 cars or mow
1 lawn. Who has the absolute advantage in car washing, and who has the absolute
advantage in lawn mowing?
a. Tom in washing, Jerry in mowing.
Prepared by:
Rhoda D. Calacsan
b. Jerry in washing, Tom in mowing.
c. Tom in washing, neither in mowing.
d. Jerry in washing, neither in mowing.
2. Once again, in an hour, Tom can wash the 2 cars or mow 1 lawn, and Jerry can wash 3
cars or mow 1 lawn. Who has the comparative advantage in car washing, and who has
the absolute advantage in lawn mowing?
a. Tom in washing, Jerry in mowing.
b. Jerry in washing, Tom in mowing.
c. Tom in washing, neither in mowing.
d. Jerry in washing, neither in mowing.
IV. Assessment
Give what is being asked. Write your answer on the space provided. (10 points)
1. Below is a production possibilities table for consumer goods (automobiles) and capital
goods (forklifts):
Type of Production Alternatives
Production A B C D E
Automobiles 0 2 4 6 8
Forklifts 30 27 21 12 0
Show these data graphically.
V. Other References
• Mankiw, N.G., (2018). Principles of Economics. 8th ed. USA: Cengage Learning
• McConnell, C.R., et. al. (2018). Economics: Principles, Problems and Policies. 19th ed.
New York, USA: McGraw/Hill Companies, Inc.
• Manapat, et.al., (2016). Economics, Taxation and Agrarian Reform. Quezon City,
Philippines: C&E Publishing, Inc.
• Nagar, P., (2023). The ABC of Microeconomics. 2nd ed. India: Exceller Books.
Prepared by:
Rhoda D. Calacsan
