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12

ABM
APPLIED ECONOMICS

QUARTER 3: WEEK: 2

Capsulized Self-Learning
Empowerment Toolkit

Schools Division Office of Zamboanga City

Region IX, Zamboanga Peninsula
Zamboanga City

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Leizel S. Esona/ Teacher III
Manicahan National High School
 1

CapSLET
APPLIED ECONOMICS

Subject & Applie

Grade Level d Eco- QUARTER 3 WEEK 2 DAY
12 dd/mm/yyyy
Basic Economic Problems and How Applied Economics Solves
CONTENT
Economic Problems
MOST Examine utility and application of applied
ESSENTIAL economics to solve economic issues and
LEARNING
problems
COMPETENCY

IMPORTANT: Do not write on this material. Write your answers on a separate

sheet of paper

KNOW AND UNDERSTAND

CONTENT STANDARD:
The learner demonstrates understanding of economics as an applied science
and its utility in addressing the economic problems of the country .

CHECKPOINT: How would utility and application of applied economics

be able to solve economic issues and problems?

As a society with over 100 million populations, the Philippines, like any other
country, has been encountering different economic problems. With the recent event
due to pandemic, the country is also suffering from economic depression. Economic
problems arise due to the unlimited needs and want of the people with only limited or
scarce resources available to satisfy them. Hence, people have to choose how to
allocate the scarce resources available. The issue of scarcity on supply due to limited
resources, but unlimited wants, is the ultimate economic problem. Scarcity implies a
limited quantity of resources needed in production.
The main issues on production include the products to produce; how to produce
these products, for whom to produce these products, and how to make the economy
grow. Therefore, it is the concern of the economist on how these resources be allocated
and use most efficiently.

What are the four basic economic problems?

1. What to produce? The main problem of the economy is to decide what products
and services to produce and in what quantity. This involves the allocation of
scarce resources which will serve as inputs to make products to be used by
consumers.
2. How to produce? This involves finding efficient and effective techniques for
production. Society must choose between techniques to produce the

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Leizel S. Esona/ Teacher III
Manicahan National High School
 2

commodity. Further, the choice depends on the availability of different factors of

production and their prices.
3. Whom to produce? This refers to who receives the products and services.
Society has to decide on who gets what share of the total output of goods and
services produced. In other words, society decides on the distribution of goods
and services among the members of the society.
4. What provision should be made for economic growth? Can a society use all its
resources for current consumption? Yes, it can, However, it is not likely to do
so. The reason is simple. If a society uses all its resources for current
consumption, then its production capacity would never increase.

Three options to deal scarcity

1. Economic Growth is defined as an increase in the ability to produce goods

and services. This means we are able to produce more, but it doesn’t
necessarily mean we do produce more goods and services and satisfying
more of our satisfaction. All societies, therefore, try to achieve economic
growth.

2. Reducing wants/ expectations

A second way for society to handle scarcity is to reduce its wants. If we didn’t
want so much then there would be less scarcity.

3. Using existing resources wisely= maximizing satisfaction. There are four

ways how society can use resources wisely: productive efficiency, allocative
efficiency, full employment, and equity.

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Leizel S. Esona/ Teacher III
Manicahan National High School
 3

Choice, Opportunity Cost and Economic Problems

The economic problem can be

illustrated with the concept of
opportunity cost.

A city government has 20

million pesos to spend. They
decide to spend it on new job
programs instead of on trash
collection. A clean environment
is the opportunity cost.
A government may have
Choice and opportunity cost choices on how to spend limited
are two fundamental concepts in resources. They have to
economics. Given that resources choose between health care
are limited, the producers and and military spending. If they
consumers have to make choices increase spending on the
between competing alternatives. military, the opportunity cost is
Individuals must choose how best less spending on health care.
to use their skills and effort, firms Socioeconomic Goals: There
must choose how best to use their are things that the government
workers and machinery, and tries to achieve through how it
governments must choose how spends money and resources.
Equity: Equality between
best to use taxpayer’s money.
people’s opportunities. Thru
Because of scarcity, there is  Redistribution income:
a need to make decisions in taking from the rich and
choosing to maximize the use of giving to the poor.
scarce resources to satisfy as  Fare wages for workers.
many wants as possible. A trade- Raising the minimum
wage to account for
off is usually involved when a
inflation.
choice is made. A choice is a  Assistance for
possible comparison of homebuyers. Giving
alternatives. For example, loans to individuals who
someone gives up going to see a are buying real estate.
movie to study for a test in order to  Equal Employment
get a good grade. What you give Rights.
up has value. This value is called
opportunity cost. Every choice has
an opportunity cost. The
opportunity cost is the value of
the next best alternative.

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Leizel S. Esona/ Teacher III
Manicahan National High School
 4

BE ABLE TO DO
Let’s Practice!
Task 1: Case Study Analysis

Directions: Examine the following case studies below and answer the questions.

Case Study 1
A city government decides to spend money on new stoplights instead of
new textbooks for schools.

Question:

1. What is the opportunity cost?

Case Study 2
Your city has 20 billion pesos of tax money to use to make the city a better
place to live. The city council has narrowed the possibilities down to the two
choices described below. The decision must be made next week.
 Use the tax money to plant 300 new trees along some streets of the
city. This will provide more shade, make the city more beautiful, and
give animals, such as birds more places to live.

 Use the money to build another baseball/ softball field for the
children of the city. Right now there are just too many teams for the
one existing field. Some of the children cannot be on the team
because there is no place to play games if more teams are formed.

Questions:

1. What would you do?

2. What is the opportunity cost of your decision?

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Leizel S. Esona/ Teacher III
Manicahan National High School
 5

Let’s Practice Pa MORE!

Task 2: Choose Me Wisely

Directions: Read carefully. Given the limited resources below, select the most
efficient products that could be produced to maximize production and
help the economy.

Raw Materials Finished Products/Services Choice

1. Crude oil gasoline or kerosene ________________

2. Palm oil cooking oil or lipsticks ________________
3. Cloth scraps washable masks or doormats ________________
4. Meat fresh or frozen meat ________________
5. Fish fresh or dried fish ________________

REMEMBER
Key Points

 Economics can be a tool to solve economic problems on the production of goods

and services.
 The basic economic problems on production include: what to produce, whom to
produce, how to produce, and what provision on production for economic
growth.
 Strategic options/ decisions to economize the problems include economic
growth; reduce expectation-reduce wants, and use existing resources wisely.
 Trade-off is used in making choices. Every choice has an opportunity cost. The
opportunity cost is the value of the next best alternative.

TRY
Let’s see how much have you learned today!

Multiple Choice.
Directions: Write the correct answer on a separate sheet of paper.
[Link] combination of resources and 6. Why does scarcity exist?
wants causes the economic problem? a. Each year workers tend to produce
a. Unlimited resources, limited wants less than previously.
b. Limited resources, unlimited wants b. Machines wear out in time.
c. unlimited resources, limited wants c. There are not sufficient resources to
d. unlimited resources, unlimited wants meet everyone’s wants.
d. There is a limit to people’s wants.

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Leizel S. Esona/ Teacher III
Manicahan National High School
 6

2. The local manufacturing company 7. Commercial companies are cutting

decides to produce more rubbing down tropical rainforests for hardwood
alcohol during the pandemic to supply timber. What is the opportunity cost to
the growing demands in the market. It the society of this activity?
solves issues on: a. tax revenue from the sale of the
a. Whom to produce timber.
b. How to produce b. the environment that is destroyed
c. What to produce c. the product made from the timber.
d. How much incentive d. the profit of the companies

[Link] fundamental economic problem 8. The city needs urgent services of the
must be solved efficiently? medical front liners in curing the
a. export policies increasing number of COVID patients.
b. scarcity of resources Raw materials are scarce for the
c. surplus of demands production of PPEs. To whom would
d. unlimited wants you produce first the available
resources?
4. Which economic changes would a. Police Officers
increase the economic problem of b. Barangay workers
scarcity? c. Medical Front liners
a. decrease in fish stocks d. Soldiers
b. discovery of new oil field 9. A hospital cannot treat all people that
c. increase in labor productivity need treatment. This is an example of
d. waste reduction _____.
a. excess supply
5. Construction companies are building b. limited wants
new houses on land previously used for c. scarcity
farming. What is the opportunity cost d. unlimited resources.
ofthis activity?
a. improved living conditions 10. Which statement best explains why
b. less congestion in city centres drought is an economic problem?
c. more homes for new homeowners. a. Drought cannot be controlled.
d. some farm outputs b. Rainfall is unreliable.
c. The effects of drought involve the
government.
d. Water is a scarce good.
ELECTRONIC SOURCES:
2021. [Link]
valley/economics/lecture-notes/abm-applied-economics-12-q1-w2-
mod2/9229791/view.
REFERENCES

"The 5Es Of Economics". 2021. [Link].

[Link]

This learning resource contains copyright materials. The use of which has not
been specifically authorized by the copyright owner. We are making this
learning resource in our efforts to provide printed and e-copy learning
DISCLAIMER resources available for the learners in reference to the learning continuity plan
for this division in this time of pandemic. This LR is produced and distributed
locally without profit and will be used for educational purposes only. No
malicious infringement is intended by the writer. Credits and respect to the
original creator/owner of the materials found in this learning resource .

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Leizel S. Esona/ Teacher III
Manicahan National High School
 7

CapSLET
APPLIED ECONOMICS
Subject & Grade Applied
QUARTER 1 WEEK 2 DAY
Level Eco-12 dd/mm/yyyy
Basic Economic Problems and How Applied Economics Solves
CONTENT
Economic Problems
MOST ESSENTIAL
LEARNING
Examine utility and application of applied
COMPETENCY economics to solve economic issues and problems
ANSWER KEYs
Let’s Practice!
Task 1: Case Study Analysis
Promoting the education of citizens
Task 2: Case Study Analysis

Use the tax money to plant 300 new trees along some streets of the city. This will
provide more shade, make it the city more beautiful, and give animals, such as birds
more places to live.

Softball field for children to use to play games.

( Answer may vary)

Let’s Practice Pa MORE!

Raw Materials Choice

1. Crude oil gasoline( for efficiency)

2. Palm oil cooking oil(useful)
3. Cloth scraps washable masks(useful and efficient)
4. Meat fresh meat (healthier)
[Link] fresh (healthier)

TRY
1. B 6.C
2. C 7.B
3. B 8.C
4. A 9.C
5. D 10.D

“Unido, Junto avanza con el EduKalidad Cree, junto junto puede!”

Prepared by: Leizel S. Esona/ Teacher III
Manicahan National High School