The document discusses applied economics and how it can help solve basic economic problems. It identifies the four basic economic problems as: what to produce, how to produce, whom to produce for, and what provisions should be made in production. Applied economics seeks to address the fundamental problem of scarcity by helping societies answer these basic questions around production and allocation of limited resources. It provides strategic solutions like promoting economic growth, reducing wants, and improving resource use to help economies function efficiently despite scarce resources and unlimited wants.

1. Applied Economics
Basic Economic Problems and
How Applied Economics Solves
Economic Problems

2. https://int.search.myway.com/search/AJimage.j
Specifically, this module will help you to:
❖ identify the basic economic problems
❖ illustrate how applied economics can be used to solve economic
problems
❖ construct framework to solve the economic problem
❖ solve problems on economic activities
PRE-TEST
Let us start your journey in learning more on
the resources of production and possible issues on the
production of goods and services. Are you excited to
answer the Pre- test? Smile and Enjoy!
Part I. Identification: Direction: Please read and analyse the questions carefully. 1)
What do you think were the resources used to produce the products (dresses)? 2) What
were the issues/problems in the production of the products?
Resources In the Issues/Problems in the
Production (dress) Production
1
2
3
4
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Part II. Matching Type: Match Set A or the central economic issues and problems
to Set B or the description of economic issues.
SET A SET B
1. What to produce A. the legalities of the production
2. How to produce B. the nature of goods to produce
3. Whom to produce C. the allocation of the
among members of thesociety
4. What provision in the D. the methods of production
production of products
LESSON Utility and Application of Applied Economics to
2 Solve Economic Issues and Problems
EXPECTATIONS

3. LOOKING BACK TO YOUR LESSON
Great, you finished answering the
questions. You may request your facilitator
to check your work. Congratulations and
keep on learning!
Last topic, we discussed the nature and scope of economics; the two fields of the study which
include micro and macroeconomics. We also discussed the kinds of goods and the economic
resources to produce the goods. Let’s check your retention of our past lesson.
Part I Multiple Choice.
Directions: Kindly choose the letter of the correct answer. Encircle your answer.
1. The physical effort of the manpower to produce the basic needs of the consumers, describes
which factor of production?
a) Land
b) Capital
c) Labor
d) Entrepreneur
2. The initiative and creativity to produce something new describes which factor of production?
a) Land
b) Capital
c) Labor
d) Entrepreneur
3. The equipment of the coffee shop to produce cups of coffee, are what kind of goods or
products?
a) Consumer goods
b) Either consumer goods or capital goods
c) Capital goods
d) Economic goods
4. Which best of the following best describes economics as a social and an applied science?
a) The study of products we need to survive
b) The study of how customers make choices when there is unlimited supply of resources
c) The study of human personalities
d) The study of how buyers make choices when there is limited supply
5. The following are examples of customers’ basic needs.
a) Water and shelter
b) Iced tea
c) Laptop and cellular phones
d) Expensive bags
Part II. Matching Type
Direction: Please match the resources with the statements.
A) Land C) Labour
B) Capital D) Entrepreneurship
1. The idea for a car that runs on a rocky road
2. The crude oil used by ABM Firm to produce gasoline
3. The machine used by Mang Jose, a tailor to stitch PPEs
4. The manpower to build bridges andhouses 5.
Technicians who repair computers

4. BRIEF INTRODUCTION
In the article of Forbes Custom (2017), The Philippines: Asia’s New
Economic Powerhouse, the Philippine economy has transformed into one of Asia’s most
dynamic economies on the back of fast-paced Gross Domestic Product (GDP)
growth.(www.forbes.com). For the longest time, it has all the opportunities to sustain its
growth and stability. However, due to the problem on pandemic, at present, it is suffering from
economic depression. 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.
Guru, S. (2020) mentioned, the main issues on production include the products to
produce; how to produce these products and for whom to produce the products and how to
make the economy grow. Economics, therefore, is concerned with the allocation of resources to
make the most efficient use of these resources.
The Four Basic Economic Problems
In the article of Guru, S. (2020) Basic Central Problems Faced by an Economy, there
are basic problems common to all economies. In terms of production, common to all countries
is the problem on scarcity. This arises
because the resources are limited and have alternative uses. This problemgives
rise to four basic problems of an economy.
In this topic, we will look into these basic problems of what to produce, whom to
produce, how to produce and what provisions on production for economic growth. As we said
earlier, economics can be a tool to solve these economic problems. Economists formulate
strategic solutions to economize the problems such as economic growth or the ability to
produce goods and services, reduce expectation or the ability to reduce our wants such as
lessening consumption, and improve the use of resources or the capacity to use our existing
resources wisely. http://www2.harpercollege.edu/mhealy/eco212i/lectures/5es/5es.htm

5. Learning Module for Applied Economics
What to Produce?
If there is scarcity of goods in a society,
the firms have to make wise
decision on what
goods/service should be produced and
determine the quantity to
produced. For example, which do we
produce more, masks or
canned goods? But we need
capital goods like machines, or consumer
goods like laptops. The society must
decide the type and quantity of
good/service to beproduced to
meet the immediate needs of the society.
How to Produce?
The production of goods or services
needs effective methods and
processes. For example, you can
produce PPEs using sewing machines;
sardines using aqua resources like fish
and land resources like tomatoes. The
production requires more labor and
capital investment.
BASIC ECONOMIC
PROBLEMS OF THE
COUNTRY
For whom to Produce? What provision/laws should be
The society would always made for economic growth?
consider the immidiate A society uses all its resources for
beneficiary of the goods. For current consumption. If a society
example when we produce uses all its resources, then its
masks and PPEs we suppose to production capacity will not
produce first these for the increase. The standard of living of
frontliners of COVID Pandemic the people and the income of the
fight. A society decides on the workforce remain constant until
distribution of the goods the standard of living will decline in
and services among the the future. The society must decide
members of society who need also on the part of the resources to
them the most. be saved for future progress
APPLIED ECONOMICS ON BASIC ISSUES AND PROBLEMS
Applied Economics seeks to solve the problems on scarcity. This happens when human
wants for goods and services exceed the available
supply. In a modern economy, it is evident that a division of labor happens when people earn
income by specializing in what they produce. They will use that income to purchase the
products they need or want every day (BC Campus 2020).

6. Problem 1 You read about a traveling situation in which some airline passengers seem to get a
“fast pass” through security and move effortlessly through the boarding process, while other
passengers are waiting in long lines. In this example, the travellers who are moving quickly
through the boarding process are probably:
a) VIP passengers waiting longer more in an inconvenient lines
b) Passengers who value time and convenience and are willing to pay additional
fees for the privileges and other services
c) Loyal passengers whom they knew beforehand in which line to go to avoid delays
and inconveniences
d) Government officials who are seated in the executive area
Learning Module for Applied Economics
Also, in the division of labor, it allows workers and firms to produce more. This is
because: a) agents focus on areas of advantage due to natural factors and skill levels; b) the
agents learn and invent; c) the agents take advantage of economies of
scale. Division and
specialization of labor only work
when individuals can purchase
what they do not produce
in markets. Applied
economics then
helps you understand the basic
problems facing the world today.
It helps you
become a well-rounded thinker. And most importantly, it prepares you to be a
good citizen. (Credit: Nina Hale/Flickr Creative Commons)
https://opentextbc.ca/principlesofeconomics/chapter/1-1-what-is-economics-and-why-is-it-important/
ACTIVITIES
Activity No. 1 Let’s analyse this passage. This will help you understand our new topic on the
basic economic issues and problems in the production of goods and services. Are you ready? If
yes, you may now analyse thesituation.

7. Learning Module for Applied Economics
Activity 2. Multiple Choice (with critical thinking analysis) Direction:
Please encircle the correct answer.
1. Scarcity of resources in your locality (Manila) is evident. Only available are fabrics,
electric sewing machines and skilled workers. The government said, you are only allowed to
work from home to be safe and free from infection of viruses. Which items most likely you need
to produce?
a) PPEs
b) Canned goods
c) Sacks of rice
d) Sewing machines
2. Manila is ranked 2nd in the most cases of COVID patients in Metro Manila. The city
needs urgent services of the medical frontliners in curing the increasing number of patients.
There is scarcity in the raw materials for production. To whom would you produce first the
available resources?
a) Soldiers
b) Police Officers
c) Medical Frontlines
d) Your family
3. There is an urgent need of PPEs by the medical frontliners in the City of Manila due
increasing number of COVID patients every day. Which is not true of producing the products
(PPEs)?
a. Import from China
b. TESDA students and skilled workers may produce the PPEs
c. Manufacturers/suppliers may supply the PPEs
d. Export PPEs to Japan as gross national products
4. The ABM Manufacturing Company decides to produce more on liquid soap than bar soap to
supply the growing demands in the market. It solves issues on:
a. Whom to produce
b. How to produce
c. How much incentive
d. What to produce

8. ability to produce goods and services; reduce our wants or lessening consumption; use our
existing resources wisely; don't waste limited resources; productive efficiency; allocates
efficiency; full employment and equity of resources; and reducing wants
9
Learning Module for Applied Economics
Activity 3 Directions: You may collaborate and communicate with your friends and family
members in doing the tasks. Currently, we are dealing with scarcity on units of bicycles. Below is
a framework showing the solution on how to deal with economic issues on meeting the
products.
Question: As an agent of the economy, how will you deal with this scarcity? Choices are given
below. Place them in their proper columns as to economic growth; and improve the use of
available resources and reduce expectations.
http://www2.harpercollege.edu/mhealy/eco212i/lectures/5es/5es.htm
AnsWER A) b) c)

9. CHECK YOUR UNDERSTANDING
Learning Module for Applied Economics
• Economics can be a tool to solve economic problems on the production
of goods and services.
• Production is the process by which resources are transformed into useful forms.
• Resources are things provided by nature that can be useddirectly or indirectly
to satisfy human needs.
• The basic economic problems on production includes: what to produce, whom to
produce, how to produce and what provisions on production for economic
growth.
• Strategic options/decisions to economize the problems include: economic
growth – ability to produce goods and services; reduce expectation- reduce our
wants - lessening consumption; improve the use of resources - use our existing
resources wisely; don't waste the limited resources; productive efficiency;
allocate efficiency; full employment and equity of resources; and reduce
expectations – reducing wants.
Fill in the Blanks.
Directions: Please read and answer the following sentences
• Among nations, these are the common economic problems onproduction of goods and
services: a) ; b) ;
c) ; d) .
• Economics can be a tool to solve the fundamental problem in economics which is
in the production of goods and services.
• The strategic solutions/decisions/options to economizing problems include a) ;
b) ; and c) .
REMEMBER

10. Part I TRUE or FALSE
Directions: Please write TRUE if the statement is correct and FALSE if the statement is incorrect.
1. Scarcity in goods and services happens if the resources in
the production are inadequate or scarce.
2. Customers must choose among several alternatives if
scarcity exists.
3. Income inequality is the gap in income that exists
between the rich and the poor customers willing to buy the same
products.
4. Shortage of goods and services is an economic problem;
and shortages are always constant
5. The Build Build Build Program by the government aims
to help improve the infrastructure projects and other programs
of the country.
Part II Multiple Choice. Choose the letter of the correct answer.
1. The fundamental economic problem that must be solved efficiently
a) Scarcity of resources
b) Health system
c) Surplus of demands
d) Export policies
2. Economists point out that scarcity must be addressed to protect the
a) The poor but not the rich
b) Both the poor and the rich
c) Neither the poor nor the rich
d) The poor but never the rich
3. What two factors contribute to scarcity in the production of goods and services?
a) Unlimited resources and limited wants
b) Unlimited resources and wants
c) Unlimited wants and limited resources
d) Limited resources and wants
POST-TEST
Learning Module for Applied Economics

11. REFLECTIVE LEARNING SHEET
Every society must make choices about
which essential should be allocated with the
available but limited resources for production. In
most cases, where there is scarcity in the
production of necessities, or where there are no
enough funds to accomplish everything for the
satisfaction of everyone, the society has to make
better choices.
Today, we have to adjust to the new
normal way of living. There is
scarcity in the production of goods and services
for everyone’s needs and wants. Everything in this
world has limitations. Rich and poor, all
individuals…”ceteres paribus….” “all else are
equal”…..
Regardless of your economic status,
which is more important to you, health or
unlimited supply for your wants?
Learning Module for Applied Economics
4. If there is scarcity in public transportation, what should the learners do?
a) Home based learning is an alternative choice for access to education
b) Stop learning while waiting for transportation shortage to be solved
c) The government must import units of car from neighbor countries
d) All choices are applicable
5. The economists describe the amount of resources in an economy as:
a) Always constant
b) Can never decrease or increase
c) Unlimited at any moment in time
d) Limited at any moment in time

12. Learning Module for Applied Economics
Name Year/Section Date
Teacher School
Worksheet (Additional Activity)
Let us assess your creativity and love for nature.
Directions: Please read carefully. Despite the limited resources and
scarcity of products for our consumption, today, we still want to achieve maximum satisfaction.
We make use as few resources as possible, allocate our resources where they are best suited,
and use the appropriate technology or materials and produce the right goods and services.
Given the resources below, please select the most efficient products that could be produced to
maximize production and help the economy.
Raw material Finished Product/Services Choice
1. Steel: casino tokens or public cars?
2. Crude oil: gasoline or kerosene?
3. Cars: small cars or SUVs ?
4. Flour: cakes or breads?
5. Cloth scraps: doormats or washable masks
6. Fruits: canned juices or fresh fruits?
7. Vegetables: fresh or frozen vegetables? ________________________
8. Coconut oil: cooking oil or expensive lotion?
9. Sources of air: electric fans or units of aircon?
10. Imports: PPEs or clothes from Korea?