Introduction to Applied Economics Grade 12

1. APPLIED ECONOMICS Grade 12 ABM

2. LEARNING OBJECTIVES:
-Define Economics
-Identify economics as an applied and social science
-Answer basic economic questions
-Identify the factors of production
-Understand the importance of the production
possibilities frontier

3. ECONOMICS
- Allocation of the scare
means of production
toward the satisfaction of
human needs and wants.

4. ECONOMICS
- Comes from the Greek words: OIKOS
which means “household” and NOMUS,
which means “ system or management”.
OIKONOMIA OR OIKONOMUS,
therefore, means the “ management of
household“.

5. ECONOMICS
- It is considered the queen of
all social sciences. Because it
covers almost every activity of
an individual in relation to
society.

6. RELATIONSHIP OF
ECONOMICS TO OTHER SCIENCES
1. Business management
2. History
3. Finance
4. Physics
5. Sociology
6. Psychology

7. BUSINESS MANAGEMENT
- Provides employment
opportunities to members of the
society.
- Balance of economic activity.

8. HISTORY
- Provides information
regarding theories that can
be revisited in order to
evaluate present and future
economics issues.

9. FINANCE
- Defined as the management of money,
credit, banking, and investment.
- It is the system that includes the
circulation of money, credit and investment
decisions and provision of banking
facilities.

10. PHYSICS
- Innovations and output
brought about by physics
greatly affect the study of
economics.

11. SOCIOLOGY
- The study of the behavior
of societies.
- Economics, in relation to
sociology, essentially deals
with the behavior of

12. PSYCHOLOGY
- Is the study of human
behavior.
- It is primarily useful in the
study of MICROECONOMICS focuses
in the smallest unit of the economy.

13. SCARCITY: The Central Problem
of Economics

14. SCARCITY
- Is the basic and central
economic problem
confronting every person
and society.

15. SCARCITY
- It is at the heart of the
study of economics and the
reason why you are
studying it now.

16. SCARCITY
- Dictionary of Economics
defines scarcity as a
commodity or service being in
short supply, relative to its
demand.

17. PROBLEM OF SCARCITY
LIMITED
RESOURCES
UNLIMITED
WANTS
SCARCITY

18. NOTE!!!
- If scarcity does not exist, there is no need for us
to economize.
- But since we know that our resources are limited and
we cannot produce all the goods and services we want
to have, then there is a need for us to properly allocate
resources so that we can produce goods and services
that will maximize our satisfaction.

19. ECONOMICS
LIMITED
RESOURCES
UNLIMITED
WANTS
ALLOCATION

20. ECONOMICS
MICROECONOMICS
- is the branch of
economics that
deals with
individual decisions
of the units of the
economy
MACROECONOMICS
- Is the branch of
economics that studies
the relationship among
broad economic
aggregates like national
income, national
output, money supply,
bank deposits, total
volume of savings,
investments,

21. MICROECONOMI CS
- Operates on the level
of the individual business
firm, as well as that of
the individual consumer.

22. MACROECONOMICS
- It is focuses on the four sectors of the economy.
- The behavior of the aggregate household
(consumption)
- The decision-making of the aggregate business (
investment)
- The policies and projects of the government
(government spending)
- The behavior of external/foreign economic

23. MACROECONOMICS
- discusses the measurement
of the Gross National Product
– GNP and Gross Domestic
Product – GDP
- the business cycle

24. THE FIVE (5) MACROECONOMIC GOALS
General Price Level
Economic Growth and
Development
Money and Financial
Markets
Monetary and Fiscal
Policies
Employment

25. BASIC ECONOMIC
QUESTIONS

26. What to Produce?
How to Produce?

27. How Much to
Produce?
For Whom to
Produce?

28. FACTORS OF
PRODUCTION
Four Economic
resources serve
as input in the
production
process.

29. FACTORS OF PRODUCTION
CAPITAL ENTREPRENEURS HIP
LAND LABOR

30. THE CIRCULAR FLOW
MODEL

31. The Circular Flow Model
- Illustrates the flow of
resources and output from
households to businesses
and vice versa.

33. The Circular Flow Model
- The household sector sells
resources to and buys
products from the business
sector.

34. The Circular Flow Model
- The business sector buys
resources from and sells
products to the household
sector.

35. PRODUCTION
POSSIBILITIES
FRONTIER

36. Production Possibilities Frontier
- It represents an outcome
or production combination
that can be produced with a
given amount of resources.

38. Opportunity Cost
- It refers to the forgone value
of the next best alternative.
- It is the value of what is
given up when one makes a
choice.

40. BASIC DECISION PROBLEMS
CONSUMPTION PRODUCTION
DISTRIBUTION GROWTH OVER TIME

41. THE 3 E’S OF ECONOMICS
EFFICIENCY EFFECTIVENESS
EQUITY

42. POSITIVE OR
NORMATIVE
ECONOMICS

43. Positive Economics
- An economic analysis that
considers economic condition
“as they are” or considers
economics “as it is”.

44. Normative Economics
- An economic analysis that
judges economic conditions
“as it should be”.

46. Performance Task 1
Analysis of an Applied
Economics Article
Page 29
Submission: January 26, 2024