This document introduces applied economics. It defines economics as the study of how scarce resources are used to satisfy unlimited wants. Applied economics is defined as using economic theory and analysis to study potential outcomes in specific settings. The document outlines key concepts in applied economics including: opportunity cost as the value of the next best alternative forgone; trade-offs that must be made when choosing one option over another; marginal thinking as evaluating whether the costs and benefits of one more unit of a good; and incentives as factors influencing economic decisions. Students are assigned questions on how scarcity is fundamental to economics and the importance of applied economics in addressing a country's economic issues.

1. Introduction to Applied Economics
Rabie C. Pasturan

2. Objectives
1. Differentiate between economics as a social science
and as an applied science.
2. Apply the concept of opportunity cost when
evaluating options and making economic decisions.
3. Demonstrate optimism in making decisions.
4.Maintain compassion when faced with constraints or
limitations.

3. PICTURE ANALYSIS: FORMATIVE ASSESSMENT ( GROUP WORK )

4. What is Economics?
As a study, is the that involves
the use of scarce resources to satisfy
unlimited wants.
What is Applied Economics?
Is the application of economic theory and
econometrics in specific settings with goal of analyzing
potential outcomes.
Social science
The study of
society and how
people behave
and influence the
world around us.

5. PICTURE ANALYSIS: FORMATIVE ASSESSMENT
SCARCITY
Is a condition where there are not sufficient resources
to satisfy all the needs and wants of a population.
RELATIVE ABSOLUTE
Is when a good is
scarce compared
to its demand.
Is when supply is
limited
Circumstances that surround
the availability of the goods.

6. CHOICE AND DECISION
MAKING
OPPORTUNITY
COST
TRADE-OFF INCENTIVESMARGINAL
THINKINGRefers to the value of
the foregone alternative.
Example:
Will you study or play?
Opportunity:
Value of studying
Giving up of one thing
in return for another.
Example:
Buying a car
Trade-off:
Money cannot be saved
or used to buy other
things.
Evaluate whether the
benefit of one more unit
of something is greater
than the cost.
Example:
One more unit (slice of
pizza)
Thinking:
One more hour of
activity ( studying,
sleeping)
Something that influences
the decisions we make.
Example:
Got higher grades that
influences our parents to
raise allowance

7. SUMMATIVE ASSESSMENT
1. On a piece of paper, name TEN situations
where there is an opportunity cost, trade-off,
marginal thinking and incentives present.
2. Explain each situations clearly using the
concept of opportunity cost, trade-off,
marginal and incentives.

8. ASSIGNMENT:
1.Why is economics deeply rooted in
the concept of scarcity?
2.In what way is applied economics
important in taking economic issues
or problems of the country?