“BUDGETING 101”
 
Allow me to ask you the question above. With this pandemic, maybe some of you
might’ve not been with your, “best buddy”, allowance for months. But let’s flashback a
little bit. If you think about allowance prior the pandemic, what comes into your
mind? Now that we’re having a blast from the past, let’s take advantage of the
opportunity! Do you still remember what I’ve taught you last week about economics
being a study of resource allocation? Visit this week's discussion board and let me know
your thoughts on allowance. Plus, we'll do a little budgeting trick and hopefully make
you appreciate and realize the importance of doing it!
  
 

CHAPTER I: INTRODUCTION TO APPLIED

ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

 
We’ve learned in the previous week that Economics is primarily a social science. We’ve
further explained that as a social science, it uses a scientific method in the study of
allocation of scarce resources to answer to the unlimited human wants. Below is the
diagram that shows the economic implication of our resources versus our needs and
wants.
 

 
 
 As you can see above, we only have limited or scarce resources which are being
directed towards production for the unlimited human wants and needs. Now, aren’t you
wondering how we’ll survive if we’re faced with limited resources and unlimited needs
and wants? That’s where Economics comes in. The economic problem is to match
limited resources to unlimited wants and needs. Allocation alone addresses this issue
so is all other theories and practices I’ll be explaining as we go further with our lessons.
 
Resources are limited based on its physical quantity and its use.

1. Limited in physical quantity


 As in the case of land, which has a finite quantity.
       2. Limited in use

 As in the case of labor and machinery, which can only be used for one purpose at any one time.
 
Factors of Production

1. Land

 acreage and raw materials
       2. Labor

 unskilled, semiskilled, professional
       3. Capital

 machines, factories, transportation equipment, and infrastructure
       4. Entrepreneurship

 organizing the other factors of production and risk-taking
 
As a social science, economics if related to other social sciences that study other
dimension of a society.
 For political science, it is the study of how the creation and utilization of power is being studied
for the preservation, stability, and growth of a society as a political unit.
 On the other hand, behavioral sciences such as sociology, anthropology, and psychology
systematically examines behavior, people’s beliefs, and society’s value system.
  
 

ECONOMICS AS AN APPLIED SCIENCE

 
The study of economics has been perceived as too theoretical since it deals with
principles, laws, and assumptions governing human behavior in the allocation process.
This theoretical treatment may look as if economics is devoid of applications. But that
perspective is farther from the true concept and intent of economics.
 
Many of the principles, laws, and theories developed in economics can be applied in a
number of fields.
 In commercial sciences such as in the field of accountancy, the information generated in the
recording and analysis of transactions on the state of assets of any establishment can be useful
in making business decisions pertaining to wealth accumulation and wealth utilization.
 In marketing, understanding the behavior of consumers can be useful to firms in expanding their
market share.
 
In studying Applied Economics, it is essential to know that there are two fundamental
concepts in economics, these are choice and opportunity cost. Given that resources are
limited, producers and consumers have to make decisions between competing
alternatives. Last week you’ve enumerated the decisions you made and what choices
you picked. We’ll explain further how those have to do something with economics.
 
  

1. Choice

 All economic decisions involve making choices.
 This is the best option you’ve chosen.
       2. Opportunity Cost

 The loss of the next best option / next best alternative.
 Represents the real sacrifice.
 
Making an economic choice creates a sacrifice because alternatives must be given up,
which results in the loss of benefit that the alternative would have provided. Let’s put it
this way, if you have ₱150.00 as an allowance and you decided to purchase one
monster milktea worth ₱150.00 instead of buying one cheeseburger and one large soda
with a total worth of ₱150.00, buying the milktea means the loss of the benefit that
would have been gained from the latter. Another, for limited resources such as land, if a
new school has been built instead of building a new factory for a business, the
opportunity cost of choosing the school is the loss of factory, and what could have been
produced.
 
 “The true cost of any decision is always the closest option not chosen.”
 
 

BASIC ECONOMIC PROBLEMS AND THE PHILIPPINE SOCIOECONOMIC

DEVELOPMENT IN THE 21ST CENTURY
 
Of all the seemingly economic problems that we might think of, there are three very
dominant basic economic problems.
 

 
 
1. What to produce?

 Each and every economy must determine what products and services, and what volume of
each, to produce. In some way, these kinds of decisions should be coordinated in every society.
       2. How to produce?

 Societies decide on the mix of resources to use to create the desired output of goods and
services.
       3. For whom to produce?

 Finally, all societies need to decide who will get the output from the country’s economic activity,
and how much they will get.
 
From these three problems, it can be seen that the basic concepts of supply and
demand respond to economic problems but a point of analysis is how economics moved
beyond how to meet society’s needs and wants so that authentic development is
pursued.
 
I have gathered a few data pertaining to the status of the Philippines in the past five
years. There are still a lot that has to improve in our country but I’d like you to know of
the three major problems the country has, specifically, unemployment, poverty,
and poor infrastructure.
 
 What are your thoughts about this? Let me know!
 

How about on this one? How do you feel about this?

 
  
And lastly, what is your reaction on this?
 

Although there are some disturbing data we’ve seen, I’d like to inform you that the
Philippine government comes up with plans about the future. Below is the long-term
vision for the Philippines which is coined as “Ambisyon Nation 2040”. This is what the
government plans to achieve by the year 2040.

The question is, how are we doing as of this moment? Any thoughts?