THE STO.

NIÑO FORMATION AND SCIENCE SCHOOL-NIGHT CLASS

San Roque, Rosario, Batangas
School Year 2020-2021

CHAPTER 1: INTRODUCTION TO APPLIED ECONOMICS

construction, workers, machine operators, and
LESSON 1.1 INTRODUCTION TO production workers as well as professionals likes
ECONOMICS
SCARCITY- Insufficiency of resources to meet
the wants of the consumers and insufficiency of nurses , lawyers and doctors. The income
resources for producers that hamper enough received by labors is referred to as wage.
production of goods and services. It is a 3. CAPITAL- man-made resources used in the
condition where there are insufficient resources production of goods and services which include
to satisfy all the needs and wants of the machineries and equipment. The owner of the
population. Scarcity is the reason why people capital earns income called interest.
have to practice economics. Example: ECONOMICS AS A SOCIAL SCIENCE-
Insufficient allowance for a student who needs Economics is a different science from biology
to buy book and school supplies. and chemistry as these are physical sciences.
ECONOMICS- As a study is the social science Economics is a social science because it studies
that involves the use of scarce resources to human behavior just like psychology and
satisfy unlimited wants. sociology. A social science is, broadly speaking,
ALFRED MARSHALL- A well-known the study of society and how people behave and
economist who described economics as a study influence the world around them. As a social
of mankind in the ordinary business of life. It science, economics studies how individuals
examines part of the individual and social action make choices in allocating scarce resources to
that is mostly connected with the attainment and satisfy their unlimited wants.
use of material requisites as well-being.
RELATIVE SCARCITY- is when a good is BRANCHES OF ECONOMICS
scarce compared to its demand. Example: MACROECONOMICS- is a division of comics
Bananas are abundant in the Philippines and are that is concerned with the overall performance
being grown into a lot of regions around the of the entire economy. It studies the economic
country. But when a typhoon destroys banana system as a whole rather than the individual
plants and the farmer has no banana to harvest, economic units that make up the economy. It
then bananas become relatively scarce. focuses on the overall flow of goods and
ABOSLUTE SCARCITY- is when supply is resources and studies the cause of change in th
limited. Example: Cherries are absolutely scarce aggregate flow of money, the aggregate
in our country since we do not have the right movement of goods and services and the general
climate to grow them and we have to rely on employment of resources. Macroeconomics is
imports for our supply of cherries. This explains about the nature of economic growth, the
why cherries are very expensive in the expansion of productive capacity and the growth
Philippines. of national income.
CHOICE AND DECISION-MAKING MICROECONOMICS- is concerned with the
Because of the presence of scarcity, behavior of individual entities such as the
there is need for a man to make decisions in consumer, the producer and the resource owner.
choosing how to maximize the use of the scarce It is more concerned on how goods flow from
resources to satisfy as many wants as possible. the business firm to the consumer and how
OPPORTUNITY COST- refers to the value of resources move from the resource owner to the
the best foregone alternative. Example: When business firm. It is also concerned with the
land is devoted exclusively to the cultivation of process of setting price of goods that is known
rice, we give up an output of bananas and as Price Theory. Microeconomics studies the
mangoes that we could have planted on that land decisions and choices of the individual units and
area. how these decisions affect the prices of goods in
ECONOMIC RESOURCES- also known as the market. Likewise, it examines alternative
factors of production, are the resources used to methods of using resources in order to alleviate
produced goods and services. These resources scarcity. It does not focus on aggregate levels of
are, by nature, limited and therefore, command a production, employment and income.
payment that becomes the income of the BASIC ECONOMIC PROBLEMS OF
resources owner. SOCIETY
1.LAND- soil and natural resources that are 1. What to produce and how much?- society
found in nature and are not man-made. Owners must decide what goods and services should be
of lands receive payments known as rent. produced in the economy. Having decided on
2. LABOR- physical and human effort exerted the nature of goods that will be produced, the
in production. It covers manual workers like quantity of these goods should also be decided
on.

APPLIED ECONOMICS
Rio Jaena T. Dimayuga
Subject teacher
Page 1
 THE STO. NIÑO FORMATION AND SCIENCE SCHOOL-NIGHT CLASS
San Roque, Rosario, Batangas
School Year 2020-2021
2. How to produce?- is a question on the
production method that will be used to produce
the goods and services. This refers to the
resource mix and technology that will be applied
in production.
3. For whom to produce?- is about the market
for the goods. For whom will the goods and
services be produced? The young or old, the
male or female market, the low-income or high-
income groups?
ECONOMIC SYSTEMS
1. 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. Traditional societies exist in
primitive and backward civilizations.
2. COMMAND ECONOMY- This is the
authoritative system wherein decision-making is
centralized in the government or a planning
committee. Decisions 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.
3. 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’s preferences are reflected in the prices
they are willing to pay in the market and are
therefore the basis of the producers’ decisions
on what goods to produce.
WHY ECONOMICS IS IMPORTANT?
Students may ask “ Why do we need to
study economics?” To know how important the
subject is, all they need to do is read the front
page of the newspapers to see that the most
important news are economic in nature. Watch
the news on TV and for sure, economic news
always presents important issues.
Economics will help the students
understand why there is a need for everybody
including the government, to budget and
properly allocate the use of whatever resources
are available. It will help one understand how to
make more rational decisions in spending
money, saving part of it and even investing
some of it.
On the national level, economics will
enable the students to take a look on how the
economy operates and to decide for themselves
if the government officials and leaders are
effective in trying to shape up the economy and
formulate policies for the good of the nation.
POSITIVE ECONOMICS AND
NORMATIVE ECONOMICS
POSTIVE ECONOMICS- deals with what is-
things that are actually happening such as the
current inflation rate, the number of employed
APPLIED ECONOMICS
Rio Jaena T. Dimayuga
Subject teacher
Page 2
labor and the level of Gross National Product.
Positive Economics is an overview of what is
happening in the economy that is possibly far
from what is ideal.
NORMATIVE ECONOMICS- refers to what
should be- that which embodies the ideal such as
the ideal rate of population growth or the most
effective tax system. Normative economics
focuses on policy formulation that will help to
attain the ideal situation.
LESSON 1.2 ECONOMICS AS AN
APLLIED SCIENCE
Applied Economics is the application of
economic theory and econometrics in specific
setting with the goal of analyzing potential
outcomes. As one of the two sets of fields of
economics, it is typically characterized by the
application of the core, referring to the economic
theory and econometrics, as a means of dealing
with practical issues in fields that include
demographic economics, labor economics,
business economics, and agricultural
economics , development economics, education
economics, health economics, monetary
economics, economic history and many others.
John Neville Keynes is attributed to be the first
to use the phrase “ applied economics” to
designate the application of economic theory to
the interpretation and explanation of particular
economic phenomena.
We should b able to improve human
welfare among Filipinos by the investigation and
analysis of economic problems in the real world.
Applying economic theory in our lives means
trying to address actual economic issues and be
able to do something about it. The concept of
scarcity and choice should encourage us as
individuals to help in our own way to provide
solutions to the country’s economic problems.
ASEAN ICON
Lee Kuan Yew (1923-2015) is an
economic icon and an example of how a leader
of a previously undeveloped country can lead to
overcome its country’s basic economic problems
and move toward economic growth.
Lee Kuan Yew was the prime minister
of Singapore from 1959 to 1990, making him
the longest-serving prime minister in history.
During his long rule, Singapore became most
prosperous nation in Southeast Asia.
Born in Singapore on September
16,1923, Lee Kuan Yew became the longest-
serving prime minister in world history. Before
Lee rose through the ranks of his country’s
political system, Singapore was a poor nation
that is mired in debt and plagued by poverty.
When he became the first Prime Minister of
Singapore in 1959, Lee Kuan Yew introduced a
five-year plan calling for urban renewal and
 THE STO. NIÑO FORMATION AND SCIENCE SCHOOL-NIGHT CLASS
San Roque, Rosario, Batangas
School Year 2020-2021

construction of new public housing, greater

rights for women, educational reform, and
industrialization. In 1962, Lee led Singapore
into a merger with Malaysia but three years
later, Singapore left the union for good. Lee
resigned as prime minister in 1990 and his son
became the prime minister in 2004. He died on
March 23, 2015.

APPLIED ECONOMICS
Rio Jaena T. Dimayuga
Subject teacher
Page 3
 THE STO. NIÑO FORMATION AND SCIENCE SCHOOL-NIGHT CLASS
San Roque, Rosario, Batangas
School Year 2020-2021

WRITTEN WORK NO. 1

NAME: SCORE:
GRADE LEVEL/SEC:
I. Classify the following topics. Write MIC if it falls under Microeconomics ; MAC if it falls under
Macroeconomics.

_________1. The inflation rate in the Philippines in the last quarter of 2013 was 4.8%.
_________2. A Ᵽ340-billion deficit in the Philippines budget is expected in the year 2015.
________3. Prices of Toyota vehicles are predicted to go up in December.
_________4. Garlic prices in the past months have risen because producers hoarded their supplies in their
bodegas.
_________5. Unemployment rate has dropped because of the increase in the number of OFWs.
_________6. In the past year, Coca Cola was named the fastest selling product in the market.
_________7. Rental on land could not be increased by landowners because of the Rent Control Law.
_________8. Prices of apples and grapes tend to increase during the Christmas Season.
_________9. The Philippine economy grew at the rate of 5.8 % in 2013.
_________10. Philippine congress passed the Value Added Tax Law in strengthen the Philippine tax
system.

II. Describe the type of economic system characterized in each of the following sentences.

_________1. Prices are based on demand and supply.

_________2. The government decides on what goods should be produced.
_________3. Ancient methods are used in deciding what goods to produce.
_________4. People enjoy freedom of choice in arriving at decisions on what to buy.
_________5. People have no freedom of choice in arriving at decisions on what to buy.
_________6. Economy is stagnant, making use of practices in the olden times.
_________7. Economy is backward because no new technology or production methods are introduced.
_________8. It is the most democratic form of economic system.
_________9. People’s reference are reflected in the prices they are willing to pay in the market.
_________10. It exist in primitive and backward civilizations.

III. Identify which resources is referred by the following words.

_________1 Entertainers
_________2. Minerals
_________3. Forests
_________4. Marine Resources
_________5. Teachers
_________6. Technology
_________7. Production Equipment
_________8. Engineers
_________9. Call center agents
_________10. Business proprietor

WRITTEN WORK NO. 2

DISCUSSION QUESTIONS:
1. Why is economics deeply rooted in the concept of scarcity?
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APPLIED ECONOMICS
Rio Jaena T. Dimayuga
Subject teacher
Page 4
 THE STO. NIÑO FORMATION AND SCIENCE SCHOOL-NIGHT CLASS
San Roque, Rosario, Batangas
School Year 2020-2021

2. In what way is applied economics important in tackling economic issues or problems of the country?
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PERFORMANCE TASK NO. 1

1. Using a pie chart, show your regular allowance for the weeks and how you budget this for your school
and personal expenses.

PERFORMANCE TASK NO. 2

1. Talk to the person who prepares the household budget for the family, it could be your mother or your
father. Make a list of all basic expenses for one month. Then ask the budget in percentage for each these
expenses.

APPLIED ECONOMICS
Rio Jaena T. Dimayuga
Subject teacher
Page 5
 THE STO. NIÑO FORMATION AND SCIENCE SCHOOL-NIGHT CLASS
San Roque, Rosario, Batangas
School Year 2020-2021

APPLIED ECONOMICS
Rio Jaena T. Dimayuga
Subject teacher
Page 6