• Constitutes rational human behavior in the endeavor

to fulfill human needs and wants.

• Samuelson states that it is the study of how societies use
scarce resources to produce valuable commodities and
distribute them among different people.
• According to Nordhaus it is the science of choice. It
studies how people choose to use scarce resources or
limited productive resources to produce various
commodities and to distribute these commodities for
consumption.
Introduction to Applied Economics
Analyze the way markets
organized economic life and
produced rapid growth.

• Scottish Economist and Philosopher

• Pioneer in thinking of political economy
• Father of Economics
• The Wealth of nation 1776
Adam Smith
 The general theory of employment
,interest and money

• British Economist
• Founder of Keynesian
• Father of modern macroeconomics
John Meynard Keynes 1936
Tools of Economics
Logic It is a science that deals with sound
thinking and reasoning. In the process of
reasoning, facts and proofs should be presented
Mathematics — It is a science that deals with
numbers and their operations. Actually,
economics is the most quantifiable discipline
among social sciences.
Statistics — It is a branch of. mathematics
engages with the analysis and interpretation of
numerical data. It deals with the process of
collecting, tabulating and analyzing data to test
the validity of a certain hypothesis.
Economic Resources
• Land These consist of free gifts of nature which includes all natural
resources above, on and below the ground such as soil, rivers lakes
oceans, mountains, mineral resources and climate.
• Labor— his is also termed as human resources; Labor refers to all
human efforts, be it mental or physical, that help to produce want
satisfying goods and services.
Capital has two economic definitions as a factor of production. Capital
can represent the monetary resources companies use to purchase natural
resources, land and other capital goods. Monetary resources flow through
a nation's economy as individuals buy and sell resources to individuals
and businesses.
Capital also represents the major physical assets individuals and
companies use when producing goods or services
Economic Resources
• Entrepreneurs –is the organizer and coordinator of other factors of
production: land, labor, and capital.
- An entrepreneur is one who is engaged in economic undertakings and
provides society with goods and services it needs.

• Foreign Exchange – This refers to dollar reserves that the economy

has. Foreign exchange is part of economic currency, particularly dollars
for international trading and buying of raw materials from other
countries.
Applied Economics
The term 'applied economics' is believed to have started being used nearly
200 years ago, in the writings of French economist and businessman Jean-
Baptiste Say (1767—1832) and British political economist, philosopher
and civil servant John Stuart Mill (1806—1873).

Applied economics is the study of economics in relation to real world

situations, as opposed to the theory of economics. It is the application of
economic principles and theories to real situations, and trying to predict
what the outcomes might be.
Applied Economic Application
It is a powerful tools that enables the true and complete picture to emerge,
so that it becomes possible to decide what to do and where to go from the
current.

Applied economics act as a mechanism to determine what steps can

reasonable be taken to improve the current economic situation.

Applied economic can teach valuable lessons on how to avoid the

recurrence of a negative situation, or at least minimize the impact.