Economics – study of the allocation of scarce resources to satisfy the commerce of men and women

Adam Smith – the first economist; father of economics Scan me:

Concept of Scarce Resources:

4 Factors of Production
1. Land – uses space to create products
2. Labor – mental or physical effort
Karl Marx – considers labor as the ultimate production factor
3. Capital – divided into 2 categories:
a. Physical capital
b. Financial capital
4. Entrepreneurial ability – necessary skill to efficiently mix the other three factors;
creation and allocation of profit as the reward of the initiator and organizer of the
economic activity

Well-known Successful Entrepreneurs:

1. Steve Jobs
2. Bill Gates
3. Warren Buffett
4. Mark Zuckerberg

Opportunity Cost – the cost of the lost alternative; aka trade-off

Goods and “the Bads”

Goods – products
Bads – negative externalities and market imperfections (pollution, monopolistic competition, free rider phenomenon)
Invisible hand – collective exercise of social cooperation that allows people to pursue their sometimes narrow and
individual interests, nonetheless, with social cooperation redowns to the benefit of mankind

1. What is your personal definition of economics? Cut out images of the traffic condition from newspapers or
magazines. You may also download pictures from the Internet, then answer the following:
a. Do you agree that the worsening traffic conditions induce stress and can sometimes lead to road rage?
b. How can you contribute in solving road rage?
2. Explain the concept of scarce resources. You may use pictures and drawings to explain them.
3. Explain the 4 factors of production. You may provide pictures to depict these four factors.
4. What is opportunity cost? What are your favorite products or activities? Perhaps it is a choice between watching
a movie and going to the fun centers? Draw pictures of your opportunity cost items. Alternatively, you can also
provide pictures of these with explanations.
5. Differentiate economic goods and the “bas”. Use pictures or drawings to illustrate economic goods and “the
bads”.
6. Write an essay summarizing the life of Adam Smith. What are the highlights of his life and his contribution to
society?

Applied Economics: REVISITING ECONOMICS AS A SOCIAL SCIENCE

Eloisa Micah M. Guabes, LPT
Instructor
TYPES OF INDUSTRIES

Applied Economics: REVISITING ECONOMICS AS A SOCIAL SCIENCE

Eloisa Micah M. Guabes, LPT
Instructor