APPLIED ECONOMICS

LIST ONE OR TWO CHALLENGES FACED BY THE

COMMUTERS, TRANSPORT SERVICES AND OPERATORS
BECAUSE OF TRAFFIC PROBLEM
One of the challenges faced by commuters is
• when they often spend more time trying to
look for available public transportation
vehicle to bring them to their destinations
this is because of limited public
transportation services provided by public
transport operators.
Transport services likewise spend longer time
trying to bring their passengers to their
destination because of road congestions as
the number of vehicles using our public roads
continuously increase.
The concept of scarcity is one of the economic
concepts that needs to be addressed in our
country to find solution to traffic.
 Economics is defined as the effective
management of scarce resources to satisfy
unlimited human wants and needs. Applied
Economics as a field of economics is concerned
with using economic theories and models, as
well as related principles and concepts, to
understand contemporary socioeconomic issues.
 Applied Economics as social science and applied
science considers society as similar to the
marketplace. Many social processes and phenomena
such as social relationships, migration, and social
change can be understood in terms of economic
concepts such as demand and supply, exchange, cost
and benefits, and profit maximization. Applied
economics is closely tied to public policy and
governance, as decision - making often utilizes
economic tools and methods.
Economics as a Social Science
Nature
• It studies how individuals make choices in
allocating scarce resources to satisfy their
unlimited wants.
• It uses the scientific method to build
theories based on logical reasoning to help
explain the behavior of individuals, groups,
and organizations.
Economics as a Social Science
Nature
• It attempts to explain the economic behavior,
that arises when scarce resources are exchanged
through a systematic collection of facts and
figures to deal with the cause-and-effect
relationship.
• Economics as a social science is based primarily
on observation and deduction and the
construction of abstract models.
• It is qualitative in nature.
Scope of Economics as a Social Science
It focuses on the microeconomics branch of
economics. Microeconomics is the part of economics
whose subject matter of study is individual units, for
instance, a consumer, a household, a firm, an
industry, and the likes. It analyses how the decisions
are taken by the economic agents, concerning the
allocation of the resources that are limited in nature.
It studies consumer behavior, product pricing, firm’s
behavior, factor pricing, and the likes. The objective of
microeconomics can be achieved through the best
possible allocation of scarce resources.
Economics as an Applied Science
Nature
• It is both qualitative and quantitative in nature
• It formulates general theories through testing mainly
using data from the past.
• Economics as applied science uses econometrics and
analyses theories and models to predict outcomes of
socioeconomic issues and likewise propose solutions to
economic problems.
• It studies the factors that determine a country’s
national income, savings, investment, outputs, and
employment that promotes economic growth.
Economics as an Applied Science
Scope
• It focuses on the macroeconomics branch of
economics that studies the entire economy,
instead of individual units for instance level of
output, total investment, total savings, total
consumption, and the likes. It is the study of
aggregates and averages. It analyses wholly the
economic environment wherein the firms,
consumers, households, and governments make
decisions.
Economics as an Applied Science
Scope
• It covers areas like national income,
general price level, the balance of trade and
balance of payment, level of employment,
level of savings and investment. The
macroeconomics goal can be attained
through the effective use of the resources of
the economy.
As the modern economy is primarily
defined by knowledge and technology,
the conventional definition of Economics
that focuses on matching scarcity and
wants is challenged by the need for a
better organization to effectively address
scarcity and human wants.
Scarcity is a fundamental concept of
economics. It refers to the limitation of
resources particularly economic
resources such as land, labor, capital,
and entrepreneurship. Scarcity results
in challenges to properly allocating
resources to all sectors of the economy.
Economics is the science of scarcity.
Scarcity results in challenges regarding
properly allocating our resources and
this likewise happens in all sectors of
the economy. The concept of scarcity is
coupled with the fact that human
wants, and needs are unlimited.
Unlimited Human Wants and Needs
Needs are things desired which are
essential for human survival. Wants are
those that are desired but are not essential
for survival. (C. Manapat).
Because of scarcity, every person must
learn how to make decisions in choosing
how to maximize the use of scarce resources
to satisfy as many wants and needs as
possible.
Assuming you have 500 pesos, and you want to buy several stuffs for your
personal consumption. Allocate your money according to how much you are
willing to spend on the following:
Consider the things or objects that you own, classify them according to your
needs and wants

NEEDS WANTS