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Applied Economics
Quarter 1
Module 1: Economics as an Applied
Science
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Applied Economics - Grade 12
Quarter 1 – Module 1: Economics as an Applied Science
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Applied Economics - Grade 12
Quarter 1 – Module 1: Economics as an Applied Science
I. Introduction:
Knowing and understanding the economic problem of the country, where everybody
is complaining of not having sufficient income to meet both ends of the family, thus family
members is suffering from scarcity. Apply and studying economics is needed nowadays. This
is the reason why people have to practice economics in daily lives, in this lesson, you are
expected to understand to make good decisions in choosing how to maximized the use of
scarce resources to satisfy as many wants as possible.
II. Objectives
At the end of the lesson you
are expected to:
ABM_AE12-Ia-d-1
• Describe the basic term’s in applied economics.
• Appreciate the importance of studying economics in one’s life.
• Recognize different economics activities existing within their locality.
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IV. Pre-Test
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I. MULTIPLE CHOICE: Write the letter that correspond to the correct answer on your
answer sheet.
1. Who is the Father of modern Economics?
a. Bryan Adams b. Adam Smith c. Joseph Smith d. Joseph Adams
2. Economics etymology came from the two greek words ‘oiko’ and ‘nomos’ which
means_______.
a. management of the house c. management of funds
b. management of money d. management of the home
3. What is insufficiency in resources to meet the wants and needs of the consumers?
a. scarcity b. inflation c. depression d. recession
4. Which of the following refers to the tangible products?
a. needs b. wants c. stuff d. goods
5. Why does Economics regarded as Science?
a. It uses laboratory equipment c. It uses factual information
b. It uses scientific methods d. It uses theories
II. MATCHING TYPE: Match Column A with Column B. White the letter of the correct
answer on your answer sheet.
A B
____ 1. Opportunity Cost a. good is scarce compared to its demand.
____ 2. Absolute scarcity b. It refers to the value of the best foregone
____ 3. Trade-off c. one thing is given up in order to get another
____ 4. Economics d. supply is limited
____ 5. relative scarcity e. study of social behavior guiding in the allocation of
scarce resources.
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V. Learning Activities
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In this activity, your task is to arrange the jumbled letters and define the terms based
on your prior knowledge. Write the answers on your answer sheet.
1. NWTSA _____________
2. CRASYCIT _____________
3. DSENE _____________
5. CEOMICONS _____________
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Process Questions: Please refer your answer to the concept web and write the answer on
your answer sheet.
Learning Activity 3
Today, most of us is facing challenges that needs to be addressed; shortage of foods,
commodities, increase in gasoline price, low standard of living and other issued related to the
needs of the family.
Guided Questions: Please refer your answer base on learning activity 1 and 2. Write the
answers on your answer sheet.
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Economics comes from two old Greek words - ‘oiko’, which means ‘home’
and ‘nomos’ which means ‘management’. (household management).
What is Economics?
➢ Economics -is the study of social behaviour guiding in the allocation of scarce
resources to meet the unlimited needs and desires of the individual members of a
given society. Adam Smith is the Father of Modern Economics.
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Economics as a science
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By the term needs, we mean those requirements which are extremely necessary for a
human being to live a healthy life. They are personal, psychological, cultural, social, etc that
are important for an organism to survive.
In ancient times the three basic needs of the man are food, clothing and shelter but
with the passage of time, education and healthcare also became integral, as they improve the
quality of life. They are a person’s first priority as they are the things, that they keep us
healthy and safe. Therefore, if needs are not satisfied in time, it may result in illness, inability
in functioning properly or even death.
In economics, wants are defined as something that a person would like to possess,
either immediately or at a later time. Simply put, wants are the desires that cause business
activities to produce such products and services that are demanded by the economy. They are
optional, i.e. an individual is going to survive, even if not satisfied. Further, wants may vary
from person to person and time to time.
We all know that human wants are unlimited while the means to satisfy those wants
are limited. Hence, all the wants of an individual cannot be met and they must seek for
alternatives.
INTRODUCTION TO ECONOMICS
(Applied Economics by: Rosemary P. Dinio, PhD , Greorge A. Villasis)
Everybody goes through a day faced with constraints or limitation. People always
complain about not having enough to meet all the family’s needs. This, in effect, is the
existence of what we call scarcity. That is, insufficiency of resources to meet the wants of
customers and insufficiency of resources of producers that hamper enough production of
goods and services.
Scarcity is the reason why people have to practice economics. Part of human behavior
is the tendency of man to want to have as many goods and services as he can. However, his
ability to buy goods and services is limited by his income and purchasing power. It is
therefore in this context that man has to practice economics.
Scarcity is a condition where there are
insufficient resources to satisfy all the needs and
wants of a population. Scarcity may be relative or
absolute. Relative scarcity is when a good is scarce
compared to its demand. For example, coconuts are
abundant in the Philippines since the plant easily to
grows in our soil and climate. However, coconuts
www.wordpress.com became scarce when the supply is not sufficient to
meet the needs of the people. Relative scarcity occurs not because the good is scarce per se
and is difficult to obtain but because of circumstances that surround the availability of the
goods. Bananas are abundant in the Philippines and are being grown in a lot of regions
around the country. But when a typhoon destroys banana plants and farmer has no bananas to
harvest, then bananas become relative scarce.
On the other hand, absolute scarcity is when supply is limited. Oil is absolutely scarce
in the country since we have no oil wells from which we can source our petroleum needs, so
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we rely heavily on imports from oil-producing countries like Iran and other Middle Eastern
countries. Cherries are absolutely scarce in our country since we do not have the right climate
to grow them and we have to rely on imports for our supply of cherries. This explains why
cherries are very expensive in the Philippines.
fees, and to buy new clothes and shoes. She needs to make a choice. If she decides not to buy
new shoes for her children at start of the school year, then this is the choice she gave up.
Opportunity cost refers to the value of the best foregone alternative. When land is
devoted exclusively to the cultivation of rice, we give up an output of bananas or mangoes
that we could have planted on that area. A producer, who decides to transform all his leather
into shoes, gives up the chance to produce bags with that leather. A school teacher, who
could have worked in the bank, gives up his salary as a manager. That salary is his
opportunity cost. Without scarcity, a person does not need to make choice since he/ she can
have everything he/ she wants.
The concept of opportunity cost holds true for individuals, businesses and even a
society. In making a choice, trade-offs are involved. The opportunity cost of watching a
movie in a cinema is the value of other things that you could have bought with that money
such as a pint of ice cream, a combo meal in the fast food, or a simple t-shirt to be used in P.E
class. Another example is giving up work in favor of recreational activity, say you go on a
week’s stay in Boracay on leave without pay. Then you are giving up the income you would
have earned had you not decided to go on trip. Another example would be a business
proprietor that withdraws Php 10, 000 from his savings account so he can buy materials to be
used in his business.
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VI. Practice Tasks
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Understanding the difference between needs and wants that will help you to be
strategic about your spending.
Directions:
Categorize your spending
Think of at least 10 things you and your family has bought or spent money on
recently. Record them in either the “Needs” or “Wants” column in the table below.
• Examples of needs might be food and school supplies.
• Examples of wants might be specialty coffees, designer clothing, and video games.
Write the answers on your answers sheet.
NEEDS WANTS
After you have read the topic about the economics as an applied science, answer the
following questions below. Write the answers on your answer sheet.
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Rubric
Components Needs Developing Sufficient Above
Improvement 2 3 Average
1 4
Clarity The purpose of The central The central The central
(supported by the student purpose of purpose of purpose of the
relevant work is not the student the student is student is clear
information will define. is identified. clear and and supporting
and ideas) The central Ideas are ideas are ideas are
ideas are not generally almost always well-
focus to focused in a always focused.
support the way that focused in a Details are
topic. supports the way that relevant,
topic. supports the enrich the
topic. work.
Organization Information Information Information Information
(sequence of and ideas are and ideas and idea are and idea are
elements/ poorly are presented in a presented in a
ideas) sequenced. presented in logical logical
The reader has an order sequence sequence
difficulty that the which is which flows
following the reader can followed by naturally and
thread of follow with the reader is engaging to
thought. minimum with little or the reader.
difficulties. low
difficulty.
Mechanics There are five There are There are no There are no
Correction of or more no more more than more than two
grammar and misspellings than four Three misspelled
spelling) and / or misspellings misspellings words or
systematic and / or and / or grammatical
grammatical systematic systematic errors in the
errors in the grammatical grammatical essay.
entire essay. error in the error in the
entire essay. entire essay.
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Practice Task # 3 Let’s React in the Scenario
Instruction: Choose from the given decision to help you decide what to do in the two
Scenario below.
SCENARIO 1
Consider that you are the Barangay Captain and you have Php 150,000 budget for the
lighting of the street lights and other facilities for your barangay. Then here’s the pandemic
came in the Philippines and to prevent the virus to spread in the country some Municipalities
and Barangays are put to lockdown the decision must be made next week and one of them is
your area. All establishments and transportation are ordered to stop its operations. You have
two choices described below base on the meeting with your barangay officials.
• Use the Php150,000 pesos budget for lighting of streetlights. This will provide more
light for the safety of citizen and driver that passed through in the barangay in the
midnight to lessen the crime.
• Use the budget for the medicine kit, medical equipment, relief goods and other needs
of the barangay to help their constituent.
Guided Questions: Please refer your answer from the above given scenario. Write the
answers on your answer sheet.
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Rubric
Components Needs Developing Sufficient Above
Improvement 2 3 Average
1 4
Clarity The purpose of The central The central The central
(supported by the student purpose of purpose of purpose of the
relevant work is not the student the student is student is clear
information will define. is identified. clear and and supporting
and ideas) The central Ideas are ideas are ideas are
ideas are not generally almost always well-
focus to focused in a always focused.
support the way that focused in a Details are
topic. supports the way that relevant,
topic. supports the enrich the
topic. work.
Organization Information Information Information Information
(sequence of and ideas are and ideas and idea are and idea are
elements/ poorly are presented in a presented in a
ideas) sequenced. presented in logical logical
The reader has an order sequence sequence
difficulty that the which is which flows
following the reader can followed by naturally and
thread of follow with the reader is engaging to
thought. minimum with little or the reader.
difficulties. low
difficulty.
Mechanics There are five There are There are no There are no
Correction of or more no more more than more than two
grammar and misspellings than four Three misspelled
spelling) and / or misspellings misspellings words or
systematic and / or and / or grammatical
grammatical systematic systematic errors in the
errors in the grammatical grammatical essay.
entire essay. error in the error in the
entire essay. entire essay.
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VII. Post Test
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I. MULTIPLE CHOICE: Write the letter that correspond to the correct answer on your
answer sheet.
II. MATCHING TYPE: Match Column A with Column B. White the letter of the correct
answer on your answer sheet.
A B
____ 1. Opportunity Cost a. good is scarce compared to its demand.
____ 2. Absolute scarcity b. It refers to the value of the best foregone
____ 3. Trade-off c. one thing is given up in order to get another
____ 4. Economics d. supply is limited
____ 5. relative scarcity e. study of social behavior guiding in the allocation of
scarce resources.
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VIII. Assignment/Additional Activities
Additional Practice:
Consider the following situation and answer the questions below: You are planning to
attend college next year. The total cost of tuition and textbooks is Php10,000. If you go to
school, your room and board will cost you Php 5,000. If you did not go to school, however,
you would live at home, and your total room and board would only be Php 1,000.
Additionally, if you didn't go to college, you would work a job making Php 20,000 for the
year.
In terms of room and board alone, what would be your opportunity cost of attending college?
Be sure to explain your answer (HINT: The answer is not Php 5,000).
Guided Questions: Please refer your answer from the above given scenario. Write the
answers on your answer sheet.
1. What are the explicit costs of attending school? How much should be included for
room and board.
2. What would be the implicit cost of attending college next year?
3. What would be the total opportunity cost of attending college next year?
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Rubric
Components Needs Developing Sufficient Above
Improvement 2 3 Average
1 4
Clarity The purpose of The central The central The central
(supported by the student purpose of purpose of purpose of the
relevant work is not the student the student is student is clear
information will define. is identified. clear and and supporting
and ideas) The central Ideas are ideas are ideas are
ideas are not generally almost always well-
focus to focused in a always focused.
support the way that focused in a Details are
topic. supports the way that relevant,
topic. supports the enrich the
topic. work.
Organization Information Information Information Information
(sequence of and ideas are and ideas and idea are and idea are
elements/ poorly are presented in a presented in a
ideas) sequenced. presented in logical logical
The reader has an order sequence sequence
difficulty that the which is which flows
following the reader can followed by naturally and
thread of follow with the reader is engaging to
thought. minimum with little or the reader.
difficulties. low
difficulty.
Mechanics There are five There are There are no There are no
Correction of or more no more more than more than two
grammar and misspellings than four Three misspelled
spelling) and / or misspellings misspellings words or
systematic and / or and / or grammatical
grammatical systematic systematic errors in the
errors in the grammatical grammatical essay.
entire essay. error in the error in the
entire essay. entire essay.
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IX. Answer Key
Pre-test
I. MULTIPLE CHOICE: Write the letter that correspond to the correct answer on your
answer sheet.
II. MATCHING TYPE: Match Column A with Column B. Write the letter of the correct
answer on your answer sheet.
A B
b.____1. Opportunity Cost a. good is scarce compared to its demand.
d.____ 2. Absolute scarcity b. It refers to the value of the best foregone
c.____ 3. Trade-off c. one thing is given up in order to get another
e.____ 4. Economics d. supply is limited
a.____ 5. relative scarcity e. study of social behavior guiding in the allocation of
scarce resources.
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Learning Activity 1. Let Us Examine!
In this activity, your task is to arrange the jumbled letters and define the terms based on your
prior knowledge. Write the answers on your answer sheet.
Process Questions: Please refer your answer to the concept web. Write the answers on your
answer sheet.
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2. Why do we need to study economics?
Learning Activity 3
Today, most of us is facing challenges that needs to be addressed; shortage of foods,
commodities, increase in gasoline price, low standard of living and other issued related to the
needs of the family.
Guide Questions: Please refer your answer base on learning activity 1 and 2. Write the
answers on your answer sheet.
1. Which part of the activities was difficult to answer? Why?
✓ The difficult part of the activities is to arrange the jumbled word, because
aside of positioning the unfamiliar letter you will give some insight about the
jumbled word.
✓ Another difficult part of the activities is the process question number 2 of
activity 2. I don’t know how to answer, the importance of studying economics.
2. Which part of the activities was easier to answer? Why?
✓ The easier part of the activities is the concept Map. Because economics is
everywhere, it easy for me to supply some word related to economics.
✓ Another easier part is to arrange the jumbled word, because some of words I
already encountered during grade 10 in economics subject. That is why it’s
easy for me to give some explanation about the jumbled word.
3. As a Senior High School students, what would be your part as a contribution to our
economy?
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Practice Task #1 Reflecting on needs versus wants
Understanding the difference between needs and wants that will help you to be
strategic about your spending. Write the answers on your answer sheet.
NEEDS WANTS
Shelter Fancy suits
Food Pool
Water Touch screen cell phone
Cloth Big screen TV
Education Ferrari
Medicine Jewellery
Transportation New make up
Utilities Branded cloth
Family Starbucks
Air Home décor
1. Define economics as social science thru a self-made slogan. (the answer may vary.)
3. How will you define scarcity base on your understanding in the lesson?
(the answer may vary.)
✓ Scarcity is the unlimited wants and needs of the consumer but the resources
are limited.
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4. Do you experience scarcity in your life? (Cite your experience)
(the answer may vary.)
SCENARIO 1
1. What would you do?
✓ I will used the budget to buy medicine kit, medical equipment, relief goods
and other needs of the barangay to help my constituent.
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Post Test Key Answers
I. MULTIPLE CHOICE: Write the letter that correspond to the correct answer on your
answer sheet.
II. MATCHING TYPE: Match Column A with Column B. Write the letter of the correct
answer on your answer sheet.
A B
b.____1. Opportunity Cost a. good is scarce compared to its demand.
d.____2. Absolute scarcity b. It refers to the value of the best foregone
c.____ 3. Trade-off c. one thing is given up in order to get another
e.____ 4. Economics d. supply is limited
a.____ 5. relative scarcity e. study of social behavior guiding in the allocation of
scarce resources.
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✓ The total implicit cost would be Php 19,000. You would be giving up the Php
20,000 you would have made by working, but would "save" the Php 1,000 in
room and board that you would have spent by living at home.
3. What would be the total opportunity cost of attending college next year?
✓ The total opportunity cost would be Php 34,000, which would be equal to the
sum of the explicit costs (Php 15,000) and implicit costs (Php 19,000).
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REFERENCES
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16. Production meaning
https: //production-and-consumption-bs.weebly.com/production.html
17. Introduction to economics
https://www.slideshare.net/mobile/mikergo/introduction-to-economics-15041809
18. www.scribd.com
19. www.keydifference.com (images)
20. Manila Buliten (images)
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