Applied Economics

SCARCITY
It is a condition where there are
insufficient resources to satisfy all
the needs and wants of a
population.
 ECONOMICS
Is the social science that involves
the use of scarce resources to
satisfy unlimited wants and needs.
 TWO TYPES OF SCARCITY

1. RELATIVE SCARCITY
- When a good is scarce compared to its
demand.

2. ABSOLUTE SCARCITY
- Supply is limited.
 ECONOMIC RESOURCES
1. LABOR/HUMAN RESOURCES
- Physical and human effort exerted in production to produced
goods and services/

2. LAND/NATURAL RESOURCES
-Soil and natural resources that are found in nature and are not
man-made.

3. CAPITAL/CAPITAL GOODS
- Man-made resources used in the production of goods and
services, which includes machineries and equipments.
 TWO BRANCHES OF ECONOMICS

1. MICROECONOMICS
- It is concerned with the behavior of individual
entities such as the consumer, the producer, and the
resource owner. It studies the decisions and choices
of the individual units and how theses decisions
affect the prices of goods in the market.
 TWO BRANCHES OF ECONOMICS

2. MACROECONOMICS
- It is concerned with the overall performance of the
entire economy. It focuses on the overall flow of
goods and resources and studies the causes of
change in the aggregate flow of money, the
aggregate movement of goods and services, and
general employment of resources
BASIC ECONOMIC PROBLEMS OF SOCIETY

1. What goods and services will be

produced and how much?

2. How will goods and services be

produced?

3. For whom will goods and services be

produced?
 ECONOMIC SYSTEMS
1. TRADITIONAL ECONOMY
- Decision 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 civilization.
 ECONOMIC SYSTEMS

2. COMMAND ECONOMY
- This is the authorative system where-in
decision-making is centralized in the
government or a planning committe.
- Decisions are imposed on the people
who do not have a say in what goods are
to be produced.
- This economy holds true dictatorial,
socialist, and communist nations.
 ECONOMIC SYSTEMS

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 preference are reflected in the
prices they are willing to pay in the market.
4. TRANSITIONAL ECONOMY
- An economic system in the process of
shifting from central planning to
competitive markets.
- The process of shifting from comman
economies to market economies.
- This transition involves converting
government-owned enterprises into
private enterprises called privatization.
5. MIXED ECONOMY
- An economic system that
mixes central planning with
competitive markets.