TIME FRAME: 2 HOURS

UNIT 1

LESSON 1: REVISITING ECONOMICS AS A SOCIAL SCIENCE

INTRODUCTION

Many people have the notion that Economics is unrelated to daily life. Studying Economics in your high
school years, however, has opened your eyes to the fact that economics is everywhere and its many
concepts and ideas are applicable in various situation.

OVERVIEW

The course primarily deals with basic principles of Economics and their application to present issues
faced by the Filipino entrepreneur or businessman. The professional subject covers microeconomics and
socioeconomic issues as well as business opportunities and ventures that one may enter after finishing
the course.

LEARNING COMPETENCY

The learners..

Define the basic terms in applied economics ABM_AE12-Ia-d-1

LESSON OBJECTIVES

At the end of the lesson, the student will be able to:

• Identify and discuss the origin of economics

• Discuss the Basic Economic Concepts and

• The Basic Economic Questions and Economic Sytems

THINK…

What comes to your mind when you hear the word ECONOMICS?

ECONOMICS
DEFINING ECONOMICS

Economics refers to the effective management of scarce resources to satisfy unlimited

human wants and needs, it is a social science that studies the means by which individuals, groups, and
societies produce, distribute, and consume products and services.

The origin of the study of Economics is traced to Adam Smith who wrote the book An Inquiry into the
Nature and Causes of the Wealth of Nations in 1776.And started the idea of Economics as a separate
source of knowledge from Philosophy. He outlined the thought that society is based on
interdependence among people. The underlying interconnection, according to Smith, is the movement
of goods and services in relation to the needs and wants of people.

BASIC ECONOMIC CONCEPTS

SCARCITY

Scarcity is a fundamental concept of economics. It refers to the limitation of resources, particularly

economic resources such as land, labor, capital, and entrepreneurship. Throughout our lives, we
experience the reality of scarcity in various situations, particularly when availing of products and
services. You may have noticed that certain fruits are only available in the market during certain months
that they are not in season, they are considered scarce. Scarcity results in challenges with regard to
properly allocating these resources to all sectors of the economy.

UNLIMITED HUMAN WANTS AND NEEDS

The concept of scarcity is coupled with the fact that human wants and needs are unlimited. Economics
defines needs as things that are desired which are essential for human survival while wants are those
that are desired but not essential for survival If you were to list the things that you want to buy, own
and do in life, that list would be endless.

ECONOMIC RESOURCES AND FACTORS OF PRODUCTION

LAND refers to all natural resources that exist without man’s interventions. It encompasses all things
derived from the forces of nature such as air, water, forests, vegetation, and minerals. The payment for
land is called rent.

LABOR refers to human inputs such as manpower skills that are used in transforming resources into
different products that meet our needs. The payment for labor is called wages and salaries

CAPITAL is a man- made factor of production used to create another product. Examples are machinery
and equipment used in manufacturing companies. The payment for capital is interest.

ENTREPRENUERSHIP is the factor of production that integrates land, labor and capital to create new
products. An entrepreneur is an individual who makes the decisions with regard to production and
utilizing the other factors of production. A successful entrepreneur not only creates new products- he or
she also innovates by improving on old ones.
 THE BASIC ECONOMIC QUESTIONS AND ECONOMIC SYSTEMS

Since the scarcity of resources is central to the study of economics, it is necessary to properly allocate
these resources to meet people’s unlimited wants. This process of allocation answers the economic
questions: What to produce? How to produce? For whom to produce?

What to produce?

A society determines the kind and quantity of products it will produce depending on what the
consumers want to buy or are willing to pay for.

How to produce

A society decides who will produce goods and what process of production will be used. Goods may be
produced by corporations, small business owners , or the government itself. The process of producing
goods may be addressed depending on the costs and the availability of resources needed.

For Whom to produce?

The question revolves around the issue of who will benefit from the goods and services produced. This
depends on the distribution of wealth in a particular society. Therefore, a consumer who has the
capacity to pay for certain goods and services is more likely to benefit than one who cannot afford them.

The answers for what, how and for whom to produce are influenced by the structure of a society’s
economic system.

DISCUSS AND APPLY

Classify your belongings as either needs or wants. List them in the table below and include

explanation why you consider them to be needs or wants.

OBJECT NEED WANT

 PERFORMANCE TASK

2. Discuss a personal experience regarding scarcity. What factors bought about this problem and
how were you able to address it.

3. Make a journal detailing how you use your knowledge of economics to address simple
problems in your life. Detail your experiences over a period of one week.

REFERENCE: APPLIED ECONOMICS FOR SHS, CARLOS L MANAPAT

hyperlink

SHS_GRADE12_APPLIEDEECONOMICS-2.docx