This document provides an introduction to applied economics. It defines economics as the study of how societies use scarce resources to produce and distribute goods and services. It discusses that economics deals with scarcity, choice, and opportunity cost. The key economic resources are land, labor, and capital. It also outlines the basic economic problems societies face in determining what and how much to produce, how to produce, and for whom to produce. Finally, it briefly describes the main economic systems of traditional economies, command economies, and market economies.

1. INTRODUCTIONTO
APPLIED
ECONOMICS
PREPARED BY: TONGIERLYN D.
CORDA

4. WHAT IS ECONOMICS?
■ Is a social science concerned with using scarce
resources to obtain the maximum of the unlimited
wants of society.
■ Is the study of how societies use scarce resources to
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.

5. LearningObjectives
1. Identify basic economics problems of the country
2. Discuss the economic problems affecting the economic
stability of the country
3. Analyze and explain the root cause of the economic
problems of the country

6. which
■ Scarcity - the limited nature of
resources, underlies the basic economic
problem
■ Economic Resources - the problem of having
unlimited wants, but limited resources to satisfy them
■ Natural Resources – came from nature that are
used in production, including land, raw materials,
and natural process
■ Capital Resources - the processed
materials, equipment, and buildings used in
production

7. ■ Human Resources - the efforts of
people involved in production, including
labour and entrepreneurship
■ Needs - the essentials of life, such as food
and shelter
■ Wants - desires for non-essential items

8. Scarcity
■Is a condition where there are
insufficient resources to satisfy all the
needs and wants of a population.

9. ■Scarcity is the reason why people
have to practice economics.
Economics, as a study, is the social
science that involves the use of
scarce resources to satisfy
unlimited wants

10. Alfred Marshall described economics as
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
of material requisites of well-being.

11. Relative Scarcity-Is when a good
is scarce compared to its
demand.
AbsoluteScarcity- is when supply
is limited.

12. Choice and decision making
■ Because of the presence of scarcity, there
is a need for man to make decisions in
choosing how to maximize the use of the
scarce resources to satisfy as many wants
as possible.

13. Opportunity cost
■ Refers to the value of the best foregone
alternative.

14. Economic resources
■Land
■Labor
■Capital

15. Land
■Soil and natural resources that are
found in nature and are not manmade.
Owners of lands receive payment
known for rent.

16. Labor
■ Physical and human effort exerted in
production. It covers manual workers like
construction workers, machine operators and
production workers, as well as professionals like
nurses, lawyers and doctors.

17. capital
■ Man-made resources used in the production of
goods and services which include machineries
and equipment.The owner of capital earns an
income called interest.

18. Economic as social science
■ As a social science, economics studies how
individuals make choices in allocating
scarce resources to satisfy their unlimited
wants

19. 2 branches of economics
■ Macroeconomics
■ Microeconomics

20. ■Macroeconomics is a division of
economics that is concerned with the
overall performance of the entire
economy.

21. Microeconomics
■ Studies the decision and choices of the
individual units and how these decisions
affect the prices of goods in the market.
■ It also concerned with the process of setting
prices of goods that is also known as Price
Theory.

22. Basic economic problems of society
■What to produce and how much?
■How to produce?
■For whom to produce?

23. What to produce and how much?
■ Society must have to decide what goods and
services should be produced in the economy.
Having decided on the nature of goods that will
be produced, the quantity of these goods
should also decided on.

24. How to produce
■Is a question on the production method
that will be used to produced the
goods and services.This refers to the
resource mix and technology that will
be applied in production.

25. For whom to produce
■ Is about the market for goods. For whom
will the goods and services be produced?
The young or old, the male or female
market, the low-income or the high
income groups?

26. Economic systems
■ Traditional economy
■ Command economy
■ Market economy

27. Traditional economy
■ Decisions are based on traditions and
practices upheld over the years and passed
on from generation to generation.
Methods are stagnant and therefore not
progressive.

28. Command economy
■ This is the authoritative system wherein
decision-making is centralized in the
government or a planning committee. Decision
are imposed on the people who do not have a
say in what goods are to be produced.This
economy holds true in dictatorial, socialist, and
communist nations.

29. Market economy
■ This is the most democratic form of economic
system. Based on the workings of demand and
supply, decisions are made on what goods and
services to produce.. People preferences are
reflected in the prices they are willing to pay in
the market and therefore the basis of the
producers decisions on what goods to produce.