The document provides an introduction to key concepts in applied economics. It defines economics as the study of how societies use scarce resources to produce and distribute goods and services. Some basic economic terms are explained, including the economic problems of what, how, and for whom to produce. The document also outlines different economic systems and the three main factors of production: land, labor, and capital.

1. INTRODUCTION TO
APPLIED ECONOMICS
By:APRIL MAE C. BERIO

2. “FIXEDME IAM CRUMBLED”
Instruction:Fixedthefollowingrumbledletters:
CorrectAnswer:
SEIPRENRTE
ENTERPRISE

3. “FIXEDME IAM CRUMBLED”
Instruction:Fixedthefollowingrumbledletters:
ANDL
LAND
CorrectAnswer:

4. “FIXEDME IAM CRUMBLED”
Instruction:Fixedthefollowingrumbledletters:
RBOLA
LABOR
CorrectAnswer:

5. “FIXEDME IAM CRUMBLED”
Instruction:Fixedthefollowingrumbledletters:
APITLCA
CAPITAL
CorrectAnswer:

6. LearningObjectives
■ 1.define basic terms in applied economics
(ABM_AE12-Ia-d-1);
■ 2. identify the basic economic problems of the
country(ABM_AE12-Ia-d-2);
■ 3. explain how applied economics can be used to
solve economic problems(ABM_AE12-Ia-d-2).

7. WHAT IS ECONOMICS?

8. WHAT IS ECONOMICS?
■ Is a social science concerned with using scarce resources to obtain
the maximum of the unlimited wants ofsociety.
■ Is the study of how societies use scarce resourcesto produce
commodities and distribute them among different people.
■ Is the study of production, distribution, selling and use of goods and
services.
■ Is the study of how people use their limited resources to try
to satisfy unlimited wants.

9. ■ Scarcity-thelimitednatureofresources, which
underliesthebasiceconomicproblem.
■ Economic Resources - the problem of having unlimited
wants,butlimitedresourcestosatisfythem.
■ NaturalResources – camefromnaturethatareused in
production, including land, raw materials, and natural
process.
■ CapitalResources -theprocessedmaterials,
equipment,andbuildingsusedinproduction.
Basic terms in Applied Economics

10. ■ HumanResources-theeffortsofpeople involved in
production, includinglabour andentrepreneurship
■ Needs-theessentialsoflife,such asfood andshelter
■ Wants-desiresfornon-essentialitems

11. Scarcity
■Is a condition where there are insufficient
resourcestosatisfyallthe needsandwantsofa
population.

13. ■Scarcityisthereasonwhypeople have to
practiceeconomics. Economics, asastudy,is
thesocial science that involves the use of
scarce resources to satisfy unlimitedwants

14. AlfredMarshalldescribedeconomicsas study of
mankind in the ordinary business life.It examines
part of the individual and social action that is most
connected with the attainment and use ofmaterial
requisitesofwell-being.

15. RelativeScarcity-Iswhenagood is
scarce compared to its demand.
AbsoluteScarcity-iswhensupply is
limited.

16. Choice and decision making
■ Becauseofthepresenceofscarcity,there is a need
for man to make decisions in choosinghowto
maximizetheuseofthe scarceresourcestosatisfy
asmanywants aspossible.

17. Opportunitycost
■ Referstothevalueofthebestforegone alternative.
■ the loss of potential gain from other
alternatives when one alternative is chosen.

24. Why is opportunity cost matter?
Understanding opportunity cost can help you make better
decisions. When you fully understand the potential costs
and benefits of each option you’re weighing, you can
make a more informed decision and be better prepared
for any consequences of your choice.

25. Economic Resources
■Land
■Labor
■Capital

26. Land
■Soil and natural resources that are foundin
natureandarenotmanmade. Owners of lands
receive payment known forrent.

27. Labor
■ Physical and human effort exerted in production. It
covers manual workers like construction workers,
machine operators and productionworkers,aswellas
professionalslike nurses, lawyers and doctors.

28. Capital
■ Man-maderesourcesusedintheproductionof
goods andserviceswhichincludemachineries and
equipment.Theownerofcapitalearnsan income
calledinterest.

29. EconomicsasSocialScience
■ As asocialscience,economicsstudieshow
individuals make choices in allocating scarce
resources to satisfy their unlimited wants

30. 2 BranchesofEconomics
■Macroeconomics
■Microeconomics

31.  Macroeconomics is a division of
economicsthatisconcernedwiththe
overall performance of the entire
economy.

32. Microeconomics
■ Studies the decision and choices of the
individualunitsandhowthesedecisions affect
thepricesofgoodsinthe market.
■ It also concernedwith the processofsetting prices
of goodsthat isalsoknown asPrice Theory.

33. Basiceconomicproblemsofsociety (3 Economic
Questions)
■Whattoproduceandhowmuch
■How toproduce
■Forwhomtoproduce

34. Whattoproduceandhowmuch
■ Society must have to decide what goods and
services should be produced in the economy.
Havingdecidedonthenatureofgoods thatwill be
produced, the quantity of these goods shouldalso
decidedon.

35. How toproduce
■Isaquestionontheproductionmethod that
will be used to produced the goods and
services.This refers to the resource mix
and technology that will beappliedin
production.

36. Forwhomtoproduce
■Isaboutthemarketforgoods.Forwhom will
thegoods andservicesbeproduced? The
young or old, the male or female market, the
low-income or the high incomegroups?

37. EconomicSystems
■ Traditionaleconomy
■ Commandeconomy
■ Marketeconomy

38. TraditionalEconomy
■Decisions are based on traditions and practices
upheldovertheyearsandpassed on from
generation to generation. Methods are
stagnant and therefore not progressive.

39. CommandEconomy
■ This is the authoritative system wherein decision-making
is centralized in the governmentoraplanningcommittee.
Decision are imposed on the people who do not have a
say in what goods are to be produced. This economy
holdstrueindictatorial,socialist,and communistnations.

40. MarketEconomy
■ This is the most democratic form of economic
system.Basedontheworkingsofdemandand
supply,decisionsaremadeonwhatgoods and
services to produce. People preferences are reflected
inthepricestheyarewillingtopayin the market and
therefore the basis of the producersdecisionson
whatgoods toproduce.

41. Activity Sheet
“JUMBLED PROBLEMS”
Mechanics:
■ Learnerswillbedividedintosixgroupsandprepareasheetof paper and a
pen.
■ Membersmustassignaleaderwhowillwritetheiranswers.
■ Jumbledwordsrepresentingeconomicproblemsbelowwill beshownto
theclass

42. ECONOMIC PROBLEM
1. CARSCITY
2. CIMNOCOE ERSOUSECR
3. ALURATNORSECESUR
4. ACTALPIERSOECSRU
5. MANHU SOURCERES
6. SDEEN
7. STAWN