MODULE 1: INTRODUCTION TO

ECONOMICS
MELCs based
OBJECTIVES
differentiate between economics as a social
science and applied science;
apply the concept of opportunity cost when
evaluating options and making economic
decisions;
make decisions based on how man can satisfy
most his wants given limited resources;
differentiate macroeconomics and
microeconomics;
describe and state the importance of economic
resources;
explain scientific methods in solving economic
problems;
differentiate positive and normative economics;
and
analyze basic economic problems and propose
solutions to the problems using the principles of
applied economics.
IN YOUR OWN
THINKING,
WHAT DOES
ECONOMICS
MEAN?
 What is Economics? British economist Alfred Marshall
defined economics as ”the study of
man in the ordinary business of life”.

is the study of the ways that

individual and societies
allocate their limited
resources to satisfy their
unlimited wants and needs.

Scarcity – is a the reason why people have

to Two types: Relative and
practice economic.Absolute
a condition where there are insufficient resources to
satisfy
all the needs and wants of a population.
 Choice and
Decision- Making

“Rational
People Think
at the Margin”
 ECONOMIC
RESOURCES
known as factors of production, are resources used
to produce goods and services.
n
 ECONOMICS AS SOCIAL
SCIENCE
Studies how individual make choices in allocating scarce
resources
to satisfy their unlimited wants.
study of human behavior just like psychology and
sociology.

ECONOMICS AS APPLIED
SCIENCE
Helps students to learn about the relationship of a business
and
basic economic theories.

Focuses on: Urban problems, health-care crisis,

agricultural
problems, poverty, economic growth and environment.
 DIVISION OF
MICROECONOMICS
? ECONOMICS
MACROECONOMICS

is a branch of economics dealing with the

?

is a branch of economics that studies the

behavior of individuals and firms. performance, structure, behavior, and decision-
making of an economy as a whole.
 TOPICS UNDER MICROECONOMICS AND
MACROECONOMICS
Worm’s eye Bird’s eye
view view
 and how
much?

BASIC
ECONOMIC
PROBLEMS OF
SOCIETY
BASIC ECONOMIC PROBLEMS OF THE
COUNTRY
?
?

?
UNEMPLOYMENT
RATE
unemployment rate in January 2020 was 5.3%
while Many
in April 2019, it was recorded at 5.1%.
17.7% - 7.3 million unemployed Filipinos April
2020. This translates to about
The 2018 poverty incidence among population of Filipinos 17.7 millions Filipinos living
Whose per capita income is insufficient to meet their in
Poverty in 2018-2020.
needs.
is a condition in which a community lacks the
financial resources and essentials for a minimum
standard of living.

POVERTY
 POOR QUALITY OF
INFRASTRUCTURE

4% of GDP, up from original forecast of 3.8%,

but still down from 5.4% achieved last year.
From P4.1 trillion budget, which was nearly unchanged
for this year next year’s outlay is pegged at P4.34
trillion, DPWH Solution: TRAIN LAW – 30% Social
services 70 % Infrastructures.
Tax Reform for Acceleration and Inclusion (TRAIN) Act, officially cited as Republic Act
No. 10963 signed into law by President Rodrigo Duterte on December 19, 2017. For
“BUILD BUIL BUILD PROGRAM”.

The less equal the distribution, the higher income

inequality is.

INCOME INEQUALITY
- Tax and Gov’t
spending.

Pump priming -is the action taken to stimulate an economy,

usually during a recessionary period, through government
spending and interest rate and tax reductions. e.g pensions
and scholarships, 13ᵗʰ m pay etc.
 Scientific Approach in the Empirical
Testing of an Economic Theory
Economics is a study that attempt to
explain how an economy operates.
And how the consumer attempts to
maximize his/her wants within limited
means.

Using tools such as logic, mathematics and

statistics, the student needs to approach the
empirical testing of an economic theory in
scientific manner. This steps involves the
following steps:
POSITIVE Vs. NORMATIVE Objective
statement
Subjective statement

ECONOMICS
1. Positive economics is based on
fact and cannot be approved or
disapproved. It is a phrase made
famous by Richard G Lipsey, after
Milton Friedman (1966)

'The Methodology of Positive

Economics'.

'All that the positive economist asks is that something

that is positive and testable should emerge from his
theories somewhere ( for if it does not, his theories will
have no relation to the world around him.'
Source: Lipsey (1983) p. 7.

2. Normative economics focuses on

the value of economic fairness, or
what the economy "should be" or
"ought to be. "Is based on value
judgments.
 END.

SEE YOU NEXT MEETING!