APPLIED

APPLIED ECONOMICS
ECONOMICS
Quarter
Quarter 1-
1- Module
Module 11
Differentiate
Differentiate Economics
Economics AsAs Social
Social
Science
Science And
And Applied
Applied Science
Science
In
In Terms
Terms Of
Of Nature
Nature And
And Scope
Scope
What I Need
to Know???
This module was designed to understand how senior high school
learners would appreciate applied economics as a course.
Economics is everywhere. You may be unaware of it but most of
your daily decision-making from choosing between doing your
homework or watching TV, to picking adobo over sinigang for
lunch has the very same foundation as economics. The actions
you take involve some sort of analysis where you weigh the pros
and cons, which is formally referred to as cost and benefit
analysis. This behaviour underlies the study of economics. Later,
you will learn how this idea ties to an economic concept and how
a seemingly unimportance decision on an individual level has a
far bigger effect.
After going through with this module, you are expected
to:
• define economics
• identify the nature and scope of economics
• apply the concept of microeconomics and
macroeconomics in various real life situations
• integrate economics in the day-to-day activities
• solve an economic problem in the house after
understanding the lesson
What I Know???
Pretest
ECONOMICS
Nature of economics
Economics (greek=oikonomia, household management)

Every family is aware of the problem about managing

household because of scarcity of resources that are used to
satisfy everybody’s unlimited needs and wants. Take for
instance family with six members who have to divide among
themselves a small pot of rice for breakfast. To make sure that
everyone has breakfast to distribute the rice equally among
themselves.
Nature of economics
According to Adam Smith (father of economics),
Economics is concern production and distribution of wealth.
Through the time economics has evolve from simple
household management to cover a wider area of study that
includes not only household but also business firms, the
government countries and the global economy.
Nature of economics
Economics has been defined in so many ways, but its most
common definition is that “it is a social science concerned
with the efficient allocation of scarce resources that have
alternative users in order to achieve the maximum satisfaction
of man’s unlimited need and wants”.
 Economics as an
Applied Science
Applied economics, as the name implies, is the application of
economic theories and models in real life. It consists of learning on
how choices affect individual decision-making and how
availability of factors aid decision makers craft sound judgment.
Economists have worked to simplify complex social phenomena
into laws, frameworks and models over the centuries. These
models now served as tools to present day policymakers so they
can make and informed decisions in achieving progress and
sustainable development.
 Economics as a
Social Science

As a study, it is the social science that involves

the use of scarce resources to satisfy unlimited
wants.
Deals with the production, distribution, and
consumption of goods and services.
 .

Is ECONOMICS is important ?
 Importance
of economics
Economic concerns everyone the housewife: the student, the
consumer, the daily wage-earner, the salaried employee, and the
voter among others. Each one is faced with certain limitations as he
or she goes through his or daily life and this being the case, he or she
has to make choices. The need to provides for the other members of
society, therefore, becomes equally important with the need of
society to survive.
 Scope
of economics
As social science, economics focuses on human behavior from its
economic dimension that is how individuals and society make
rational decisions regarding the satisfaction of needs and wants using
scarce resources.
 Scarcity
problem
It said that the fundamental problem in economics is
scarcity.
The problem of scarcity exist because there is an
imbalance between unlimited needs and wants and the
relatively limited resources that are available to satisfy
such needs and wants. Scarcity requires people to make
choices about the efficient use and allocation of these
limited resources.
 Scarcity
problem
Scarcity- it is the insufficiency of resources to meet the wants
of consumers and insufficiency of resources for producers
that hamper enough production of goods and services.
2 types of scarcity:
Relative Scarcity-> is when a good(product) is
scarce compared to its demand
Absolute scarcity-> is when supply is naturally
limited
 Tell whether the
following scarcity is
RELATIVE or
ABSOLUTE
1. Scarcity of face mask
2. Scarcity of fish
3. Scarcity of pork
4. Scarcity of water
5. Scarcity of alcohol
 Econ
omy
What is economy?
The wealth and resources of a country or region,
especially in terms of the production and
consumption of goods and services.
 Economic Resources

It is also known as factors of production, are

the resources used to produces goods and
services.
These resources are, by nature, limited and
therefore, command a payment that becomes
the income of the resource owner.
 Land
soil and natural resources that are found in
nature and are not man-made. Owners of
lands receive a payment known as RENT
 ->physical and human effort

Labor exerted in production. It covers

manual workers like construction
workers, machine operators, and
production workers, as well as
professionals like nurses, lawyers,
and doctors. The term also
includes jeepney drivers, farmers,
and fishermen.

The income received by labors is

referred to as WAGE.
 CAPITAL

– man-made resources used

in the production of goods
and services, which include
machineries and equipment.
The owner of the capital
earns an income called
INTEREST.
 Branches of Economics

MACROECONOMICS
-> It is a division of economics that is
concerned with the overall performance of
the entire economy.
 Branches of Economics
MACROECONOMICS
>It studies the economic system as a whole

>It is about the nature of economic growth,

the expansion of productive capacity, and
the growth of national income.
 Branches of Economics
MACROECONOMICS
>National output
>Unemployment rate
>Interest rates
>Inflation rate (increase in the price of goods and services)
>Stock prices
>Exchange rate
>Gross domestic product (GDP)
 Branches of Economics

MICROECONOMICS
-> the part of economics concerned with
single factors and the effects of individual
decisions.
 Branches of Economics
MICROECONOMICS
>It is more concerned on how goods flow from the business
firm to the consumer and how resources move from the
resource owner to the business firm.
 Economic System
TRADITIONAL ECONOMY
>Decisions are based on traditions
and practices.
>Methods are stagnant/not
progressive
>Traditional societies exist in
primitive and backward civilizations
 Economic System
COMMAND ECONOMY
>authoritative system
>It is a system where the
government determines what goods
should be produced, how much
should be produced and the price at
which the goods are offered for sale.
 Economic System
Market Economy

>Most democratic form of economic system

>Based on the working of demand and supply
>People’s preferences are reflected in the prices they are
willing to pay in the market and are therefore the basis of the
producers’ decisions on what goods to produce.