SHS

Applied Economics
Quarter 1- Module 2:
Utility and Application of
Applied Economics to Solve
Economic Issues and Problems

Region I
ALAMINOS CITY DIVISION
Alaminos City, Pangasinan
Project Write, Write, Write
Alternative Instructional Module
Applied Economics – Senior High School
Alternative Delivery Mode
Quarter 1 – Module 2: Utility and Application of Applied Economics to Solve
Economic Issues and Problems
First Edition, 2020

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Published by the Department of Education

Secretary: Leonor Magtolis Briones
Undersecretary: Diosdado M. San Antonio

Development Team of the Module

Writer: Maria Rowena R. Orpilla
Editor: Orlando I. Guerrero
Cynthia Tablang
Jose Radoc
Corazon Caducio
Benedicta Santos
Rey Pascua
Reviewer: Orlando I. Guerrero
Illustrator: Aldrin R. Gomez
Layout Artist: Enrico P. Conde
Management Team: Lorna G. Bugayong, PhD, CESO VI
Schools Division Superintendent
Aguedo C. Fernandez, CESO VI
Assistant Schools Division Superintendent
Wilfredo E. Sindayen, EdD, Division CID Chief
Ronald R. Radoc, EdD, EPS in Charge of LRMS
Orlando I Guerrero EPS AP

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 Target
Just like your family, society also has to decide on the best way to allocate its
limited resources. Faced with all the scarcity of resources and unlimited wants,
society has to make choices.

In today’s world, it is commonly believed that scarcity is the root cause of all
economic problems. We see that the means or resources available for satisfying
unlimited human wants are scarce compared to their demand. Scarcity of means
for satisfying various needs is the central problem of our economic life and it is
scarcity that creates the need to make a choice. Scarcity and choice go hand in
hand. All problems like poverty, unemployment, inflation etc. that a modern
economy faces originate from the scarcity of resources.

Like all other countries, the Philippines is also confronted with several issues
and problems related to the scarcity of resources. Some of these problems will be
discussed in this module with corresponding application of applied economics to
solve such problems.

In your previous module you have been introduced to concepts of economics

as social science and applied science in terms of nature and scope

This module will provide you with information and activities that will help
you understand and examine the utility and application of applied economics to
solve economic issues and problems.

The module is divided into two lessons, namely:

• Lesson 1 – Scarcity, the Basic Economic Questions and Economic Systems
• Lesson 2 – Basic Economic Problems Confronting the Development of the
Philippines in the 21st Century

After going through this module, you are expected to:

1. define scarcity;
2. discuss the three economic questions;
3. discuss the commonly used economic system and how it it used in solving
economic problems;
4. analyze the basic economic problems confronting Philippine economy;
5. analyze basic economic problems and propose solutions to the problems
using the principles of applied economics; and
6. explain the importance of applied economics application in solving economic
issues and problems.

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Activity 1. Pre Test

Directions : Read carefully each item. Use a separate sheet for your answers. Write
only the letter of the best answer for each item.

1. It is a means in which societies allocate and distribute available resources,

goods and services across a geographic area.
a. Economic system
b. Economical means
c. Economic resources
d. Economic distribution

2. In this type of economic system government intervention is minimal

a. Traditional economy
b. Market economy
c. Planned economy
d. Command economy

3. This is an economy where production and methods, exchange and

distribution of income are made according to customs and traditions.
a. Free Market economy
b. Command economy
c. Traditional economy
d. Mixed economy

4. It is a government controlled economy

a. Traditional economy
b. Market economy
c. Command economy
d. Mixed economy

5. It is the opposite of market economy :

a. Planned economy
b. Traditional Economy
c. Mixed Economy
d. All of the above

6. This refers to mechanism of distributing economic resources in order to

solve society’s fundamental economic problems
a. Promotion
b. Distribution
c. Allocation
d. Production

7. This refers that there is a limited resources to satisfy man’s unlimited wants.
a. Shortage
b. Scarcity
c. Insufficient
d. Limitation

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8. Which of the following situation is the common cause of poor infrastructure
?
a. Insufficient manpower
b. Insufficient funds to finance the huge cost of the project
c. Insufficient time of the government
d. Insufficient dollar reserves of the country

9. This occurs when there is excess supply than consumer demand.

a. shortage
b. scarcity
c. exchange
d. surplus

10. The following are issues of increase population EXCEPT _________.

a. Religious beliefs
b. Investment in education
c. poverty
d. unemployment

11. This is the state of having no work

a. Vacation mode
b. Unemployment
c. Employment
d. End of contract

12. This refers to the state or condition in which people do not have the
minimum standard of life deemed accepted by the society
a. Unemployment
b. Scarcity
c. Shortage
d. Poverty

13. How can you reduce unemployment ?

a. Decrease the salary of politicians
b. Lessen the use of machines and hire additional people to work instead
c. Provide more investment opportunities to encourage local and
international investors
d. Decrease the retire-able age to make way for new employment

14. This has something to do with the problem of of distribution

a. What to produce
b. How to produce
c. For whom to produce
d. How much to produce

15. How can applied economics be best used to solve economic problems ?
a. Applying different economic theories and concepts
b. Applying solutions based on perceptions only
c. Applying solutions from politicians
d. Applying different medical theories and concepts

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 Utility and Application of
Module
Applied Economics to
2 Solve Economic Issues and
Problems
The economy cannot produce all that we need and want. The resources needed to
produce goods and services are limited while human needs and wants are
unlimited. Therefore, there is a need to choose the allocation system best suited
for the society’s needs.

Jumpstart

Ready for some activities ?

For you to understand the lesson well, do the following activities.
Have fun and good luck!

Activity 1 : Combat COVID

Directions : Read the given situation and try to answer the following questions
below. Write your answer in a separate sheet of paper.

1. What do you think are the problems related to economics being faced by our
country during this pandemic ? Give at least 3 problems.

2. What solutions will you propose to these problems ? Why ?

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Process Questions

1. Do these problems affect our economy ?

2. How do these problems affect the economy ?
3. Are your proposed solutions applied the economic theories and principles?

Activity 2 . Jumbled Letters

Dirctions :Arrange the jumbled letters inside the boxes to reveal the correct
answer.

1. It is the state of having no job or work.

E M P T Y L O N U N M E

2. The state of one who lacks a usual or socially acceptable amount of

money or material possessions.

R E V T Y P O

3. The process or system by which goods and services are produced, sold
and bought in a country or region.

C O M O N E Y

4. These are the basic equipment and structures that are needed for a
country to function properly.

E R S T U C U R T S A R F N I

5. The money that is earned from work, investments or business.

C O M I N E

Process Questions

1. What words have you formed ?

2. How is it related to each other ?
3. Are these related to your lives ? How ?

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 Discover

Lesson 1: Scarcity, Basic Economic Problems and the

Economic System
Scarcity, Efficiency, Choice and Opportunity Cost
Scarcity means that there are not enough resources to produce as much as
goods and services that could satisfy man’s unlimited wants. For an individual,
resources include time, money and skill. For a country limited resources include
natural resources, capital, labor force and technology. Scarcity is the fundamental
economic problem of having humans who have wants and needs in a world of
limited resources. It states that society has insufficient productive resources to
fulfill all human wants and needs. Alternatively, scarcity implies that not all of
society’s goals can be pursued at the same time; trade-offs are made of one good
against others. Trade-offs involves accepting or choosing less of one thing to get
more of something else. Individuals who choose one good or services instead of
another, or more of one thing and less of another, are making a trade-off. Society
also makes-trade off e.g. between the need for more energy and its desire to
preserve the environment. Evaluating trade-offs involves comparing the costs and
benefits of each of the available alternatives.
There are three concepts related to scarcity namely: efficiency, choice and
opportunity cost. Efficiency means that society’s resources are used in the most
effective manner. Choice forces us to choose among available alternatives and
opportunity cost of a good is what the value of what you give up in order to have
that good. It is the forgone benefit of the next best alternative when scarce
resources are used for one purpose rather than the other. Example, if a student
chooses to review for his exam, he will have to forego watching the concert. The
benefit of watching the concert , particularly the enjoyment he/she will get, is the
opportunity cost of his decision to review

So because of scarcity, people and economies must make decisions over how to
allocate their resources. Economics, in turn, aims to study why we make these
decisions, how we allocate our resources most efficiently, making choices and
dealing with opportunity cost.

Basic Economic Problems

In order to meet the needs of its people, every society must answer the three
basic questions to make the right decision. Below are the three questions.

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1. What to produce ? First main problem of the economy
which is to decide what products and
services to produce and in what
quantity. Some factors to consider are
the availability of resources, physical
environment and customs and
traditions of the people.
2. How to produce ? Refers to the economy’s basic problem
which is to decide on how to produce
the products. This involves finding the
efficient and effective technique for the
production. What combinations of
resources and technologies will be used
to produce goods and services at low
cost ?
3. For whom shall goods and services be Refers to the problem on who will
produced ? receive the products and services an
economy produces. This question
determine the distribution of goods and
services . Goods and services will be
distributed to buyers on the basis of
their ability and willingness to pay its
existing market price.
Table 1. 3 Basic Economic Questions

Economic Systems
In order to allocate scarce resources, society must decide on what economic
system to adopt. Allocation refers to the mechanism of distributing economic
resources in order to solve society’s fundamental economic problems.
An economic system refers to the mechanism that a society can use to answer
the questions of what, how and for whom. This is the accepted way of organizing
production, distributing ownership of resources and dealing with economic
transactions in a society. Each economic system has its own way of providing
solutions to the society’s basic economic problems.

Economic systems differ from each other in terms of ownership of factors of

production and in the way economic activities are organized.
Overtime, economic systems based on philosophical ideas emerged. The table
below compares the different economic systems. It shows the alternative economic
systems that emerged in modern times and were adopted by different societies.

Economic System Ways of Solving the Status of Individuals in

Fundamental Economic Society
Problems

Traditional The decisions on what, how and for Meeting the needs of
Economy whom are influenced by customs society relies on what
and traditions. In many traditional nature could provide. The
societies, oldest members usually goods produced and

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 have a major say on what goods to gathered by members of
produce and how they are society are divided among
distributed. The methods of them. There are no formal
production are inherited from the laws governing the society
earlier generation. and all things are done as
a response to biological
and societal needs.

The government has a centralized Although the government

system of planning which covers determines what products
Command
what to do, how to do it, when to would be available and at
Economy
do it and for whom should it be what price they can be
done. The planners in the bought, the people are free
command economy identify the to decide whether or not to
resources needed in order to buy a particular
produce different goods and product.This means that
services. The central plan decides demand is still based on
how much workers can receive in the preferences of the
exchange for their services. individuals. If the quantity
that the people are willing
to buy is less than the total
output produced there will
be a surplus of goods. On
the other hand, shortage
could occur if many people
are chasing a few goods.

Alternative Economic Systems

⚫ Socialist Economy - The government manages the economic

resources for the society. The government authorities decide
how to fully employ resources and production is not for
profit.

⚫ Communist Economy - Each person produces according to

his ability and receives according to his needs. Because all
economic resources are owned by everyone, greed will be
eliminated and a formal government is no longer needed.

Market Economy The opposite of command economy The decision of private

is the market economy. In this
system, the government does not
interfere in the workings of the
economy. Every household and
business firm pursues its own
interest freely but in accordance
with law. The decisions of
individuals and firms direct
what is to be done, how to
do it, and for whom it
should be done. In a
market economy, the three
fundamental problems ares
solved without direction

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 individual households and firms from the government.
determine the movement and Private firms, pursuing
direction of the economy. The their own interests, will
market economy solves the produce goods and services
problems of what, how and for that household would buy.
whom by matching sellers and
buyers ( supply and demand) in
each market.

Alternative Economic System

⚫ Capitalist Economy - The business firms decide how to

employ the factors of production and produce goods and
services in a manner that profit could be gained.

Mixed Economy There has never been a pure People are allowed to own
traditional, command or market private properties. They are
economy. All economies have free to engage in lawful
different combinations of the economic activities.
characteristics of traditional,
command and market economic
systems. Even in economies where
economic activities are largely
determined by the market, the
government directs business
activities toward certain industries.
The government also has a role in
maintaining the stability of prices.

Table 2. Economic Systems

Lesson 2 :Basic Economic Problems Confronting the

Development of the Philippines in the 21st
Century
Typical of a growing economy, in the 21st century, the Philippines is confronted
with several issues and problems which prevent its citizens from realizing a
meaningful life, on the one hand, and in pushing its socioeconomic development,
on the other. A sizable proportion of its people have insufficient resources to afford
the basic goods and services, limited freedom in their choices of employment and
consumption and a low self-esteem that weakens its people. Meanwhile, the quality
of human resources, as well as its inadequate infrastructure are constraining the
economy to grow faster. In this lesson, we will discuss some of the basic economic
problems confronting the Philippine economy .

1. Poverty and Unequal Distribution of Income

Foremost among these problems is the extent of poverty in the country.
Poverty is a restricting condition experienced by millions of families that prevents
them in attaining the minimum level of consumption for subsistence living. There
are two categories of poverty -- absolute poverty and relative poverty. Absolute

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poverty is the lack of income to buy the basic food and necessities for
subsistence living. This is measured in terms of poverty threshold ( the income
needed to purchase these minimum nutritional requirements and other basic
necessities) and poverty incidence ( the proportion of household in the country
with family income lower than the poverty threshold or poverty line). Relative
poverty, on the other hand, refers to the structure on how the national income is
being distributed among households in an economy. The poor households are
poor because their income and other resources are lower than the income and
resources of other households. Relative poverty is measured by the Lorenz curve
and the Gini coefficient. Lorenz curve shows the share of the various household
groups (ranked from the poorest to the richest) on the total national income.) Gini
coefficient is the measure of income inequality derived from the Lorenz curve.

Various interventions being implemented by various economies including the

Philippines in addressing the problem of poverty.

1. For absolute poverty

➢ Immediate and temporary intervention is to provide free meals, housing

and adequate clothing.
➢ Some economists like Banerjee and Duflo, have suggested that there is
a need to provide resources including credit, skills and entrepreneurial
training and cash transfers.

2. For relative poverty

➢ Measures like progressive taxation, income transfers and other programs

meant to improve the income distribution can be implemented.

Unequal distribution of income or income inequality refers to the gap in income

that exists between the rich and the poor. Income is the money that an individual
earned from work or business received fro investments.

The following are the major cases of income inequality in our country.

1. Political culture can be considered as one of the major causes. The “palakasan”
and the “utang na loob” that cannot be avoided especially after election. Relatives
or friends of someone in power can have all the chances to get the position even
without or less knowledge of the position given to them. “Utang na loob” is
indetebness to someone who has done someone a favor. It is an obligation of a
person to repay whatever good things they have done to you. It may be in the
form of voting for them in the election or do something for them in return.
2. Indirect taxes is also one causes of income inequality. Indirect tax is a
regressive tax that the poor people shoulder. The burden of paying higher taxes
like the Value Added Tax.
3. Income Taxes. A Filipino worker receiving minimum wage is exempted in the
payment of income tax, but for those Filipino workers earning more than the
minimum wage is taxed 20% - 32%.
For unequal distribution of income, the following are some solutions :

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 1. Policies to enforce progressive rates of direct taxation on income and
wealth , especially at the highest levels.
2. Direct money transfers and subsidize food programs for the urban and
rural poor.
3. Direct government policies to keep the price of essential products low.
4. Reform people’s political culture

5. Raise the minimum wage.

6. Encourage and expand collective bargaining.

7. Encourage profit sharing

2. Increase in Population

The population of the Philippines has been increasing over several decades.
Measures in managing the population growth has been hotly debated in the recent
years because it has implications on the growth of the economy, on the one hand,
and can infringe on the religious beliefs of many individuals on the other hand.
There are several explanations on the growth of the population but the
economic perspective uses the economics of childbirth as a basis of analysis. This
interpretation looks at the benefits and costs of having a child. The cost-benefit
analysis can explain why fertility rate among women in poor households is higher
compared with better-off households.

The National Economic and Development Authority said that the government
will carry out the full and intensified implementation of the national Program on
Population and Family Planning (NPPFP), which was approved by President Rodrigo
R. Duterte last March 4, 2019, during the 35th cabinet meeting.
The NPPFP, a major component of the Responsible Parenthood and
Reproductive Health (RPRH) Law, aims to reduce unplanned and unwanted
pregnancies by enabling couples and individuals to attain their desired number of
children within the context of responsible parenthood.

Among the Plan’s key strategies are strengthened coordination among agencies;
budget increases for family planning commodities and services; demand-for-family
planning generation activities; financial support for local government units to
conduct community-based campaigns; the creation of a Reproductive Health
Bureau within the Department of Health; and capacity building activities for family
planning providers, especially the Commission on Population and development
(CPD).

3. Low Investment in Human Resource Development

The economic transformation of any country can be traced to a certain extent

on its human resources. Although the size of the labor force can have positive
contributions on economic growth, the quality of human resources has greater
growth impact. A high trained workforce is highly productive than a pool of
unskilled workers. Skills training and investment in education can shape human
capital of a nation. But modern economies go beyond formation of human capital
and pursue development of knowledge capital in pushing their economies forward.

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Knowledge capital is formed through heavy investments in higher education,
science and technology and research and development.
4. Weak Infrastructure

Although there is a recognition on the vital contributions of a strong

infrastructure on the economy, many low income countries including the
Philippines have weak infrastructure. The inadequate infrastructure of a country
has debilitating effects on the individuals, households, business firms and
economy.
The major reason for this inadequate expansion of infrastructure is the
insufficient funds to finance the huge costs of constructing these things. The
government has limited funds for capital expenditures including infrastructure
projects.

The construction should be done by the government because of their function

to provide public goods and their long gestation period. One option for the solution
to this problem is to borrow from external donors like foreign countries as well as
the World bank and other international development agencies. Another option for
the government is to allow the private sector to engage in the construction and
management of infrastructure projects through a public-private partnership.

5. Food Security

With more than 100 million people to feed, the concern of the government is to
ensure food security for all. Uplifting the productivity of the sector and the income
of the farmers and fisher folk is an important social objective. A vibrant agriculture
has implications on the poverty reduction and the development of other economic
sectors.

Enhancing the productivity of the agriculture sector can contribute to the

achievement of food security. This is done by increasing the income of farmers
through various means and cultivating a variety of agricultural crops as well as the
income of workers in other economic sectors that will provide sufficient resources
so they can purchase cheaper food grains sourced anywhere in the region and the
world.
6. Slow Adoption of Modern Technology

The development of the industrial sector particularly manufacturing and the

service sector should be likewise pursued to push the rapid development of the
Philippine economy. One common feature that prevents economic sectors in
realizing their growth potentials is the slow adoption of modern technology in their
processes of production and distribution.
One option to address this problem is through investment in modern
equipment and technology. This can be done through opening the economy to
foreign players as shown in the success of the electronics and automotive industry
and the BPOs.

These are but some of the basic economic issues and problems confronting the
Philippines in the 21st century and proposed solutions using the principles of

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applied economics. There are a lot more, not only our country is facing but the
whole world with the emergence of the COVID19 pandemic.

Applied Economics Application in Solving Economic Issues and Problems

1. Applying economics to the status of the economy of a company, a household or
a country helps to sweep aside all attempts to dress up the situation so that it
will appear to be worse or better than it actually is. Applied economics is a
powerful tool that enables the true and complete picture of an economic situation
or theory to emerge, so that decision-makers can choose what to do in order to
move in the right direction from a current position.

2. Applied economics acts as a mechanism to determine what steps can be

reasonably be taken to improve the current economic situation. Each element
that is relevant to the contemporary mode of operation of the entity--including
the purchase and sale of goods and services, the usage of raw materials and the
division of labor within the entity--come into play. Examining each aspect of the
current economic condition will often yield sound ideas on ways to maintain
aspects that are working at a reasonable rate of efficiency and strengthen areas
where the performance is weak.

3. Applied economics can teach valuable lessons on how to avoid the recurrence of
a negative situation or at least minimize the impact. Applied economics is all
about the application of theory to real-life situations, so the process can develop
an understanding of why a condition took place. This includes what steps were
taken to improve or correct similar situations and how those strategies can be
employed to keep the economy flowing in a direction that will preclude a repeat of
the undesired situation.

Explore

For you to master and strengthen the basic concepts you have learned from
this module., some activities are prepared for you to work on.

Enrichment Activity 1. Mind Mapping

Directions : Write what is being asked on the boxes provided below. Write your
answers in a separate sheet of paper.

ECONOMICS

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 A. Define Scarcity C. Three economic
_________________________
questions

1.
B. Concepts related to Scarcity
and biefly describe each

1.

2.

2.

3.

3.

4.

Assessment 1. Pick and Match

Directions: Match column A with column B. Write your answers in a separate
sheet of paper. Write only the letter of the correct answer.

Letter Column A Column B

1. Scarcity A. Mechanism that a society use to answer the
question of what, how and for whom
2. Allocation B. What products and services to produce and in
what quantity
3. For whom to C. Refers to the problem of who will receive the
produce products and services
4. What to produce D. Mechanism of distributing economic resources
to solve economic problems of society
5. Economic System E. Not enough resources to produce to satisfy
man’s unlimited wants
6. Opportunity cost F. Involves accepting or choosing less of one
thing to get more of something else.
7. Efficiency G. Right combination of resources and
technologies will be used to produce goods and
services
8. How to produce H. The act of picking or deciding between

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 alternatives
9. Choice I. Resources are used in a most effective manner
10. Trade-offs J. Value of what you give up to have the good

Enrichment Activity 2. Fill In The Box

Directions: Fill in the missing information to complete the table. Write your
answers in a separate sheet of paper.

How The System Solve Status of Individuals in

Economic System Economic Problems Society

Every household and business

1 firms pursues its interest freely 2
but in accordance with law.
Goods produced and
3 4 gathered are divided among
the members of society.
Both the market and
5 government has a role in 6
maintaining the stability of
prices

Mixed Economy 7 8

Assessment 2. Fill in the Box

True or False. Write TRUE if the statement is correct and FALSE if the statement is
incorrect. Write your answers in a separate sheet of paper.

_____________ 1. The market economy solves the problems of what, how and for
whom by matching sellers and buyers.
______________2. Economic systems are the same in terms of ownership of factors of
production and in the way economic activities are organized.
______________3. In a communist economy, each person produces according to his
ability and receives according to his needs.
______________4. The decisions on what, how and for whom are influenced by
customs and traditions in a traditional economy.
______________5. The government in the command economy identify the resources
needed in order to produce different goods and services.

Enrichment Activity 3. Solution to the Problem

Directions: Match the right solution ( Column B ) to the different problems faced
by our country in column A. Write your answers in a separate sheet of paper.

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 Column A ( Problems ) Column B ( Solution )
1. Unequal distribution of income A. Progressive taxation and income
transfers
2. Poverty B. Investment in higher education,
science and technology and research
development
3. Weak Infrastructure C. Financial support for LGU to conduct
community-based campaigns
4. Increase in Population D. Raise the minimum wage
5. Low investment in human resource E. Allow public-private partnership
development

Assessment 3. Make a Choice !

Directions : Use a separate sheet of paper for your answers. Write the correct
word/s from the choices inside the parentheses to complete the sentence in each
given item.

1. Management of infrastructure projects through public-private partnership can

address the problem of ( poverty, weak infrastructure ).

2. ( Income inequality, Poverty) refers to the gap in income that exists between the
rich and the poor.

3. ( Unemployment, Poverty ) is a restricting condition that prevents people in

attaining the minimum level of consumption for subsistence.

4. ( Investment in education, Investment in food resources ) can address the problem

of low investment in human resource capital.

5. Enhancing the productivity of the agriculture sector can contribute to ( food

security, unemployment ).

Well done ! The lessons are now clear to you.

Are you now ready to summarize?

Deepen

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 This module gave you the knowledge and understanding about the application
of applied economics to solve economic issues and problems. How are you going to
connect it to your daily life ?
Do the following activities applying what you have learned in this module.

Activity 1 : DIY ( Do-It-Yourself )

Directions: List some major decisions you have made in the past one month.
Beside each decision, write the opportunity cost of such. Use a separate sheet for
your answers.

Decision you chose Opportunity cost

1. 1.
2. 2.
3. 3.
4. 4.
5. 5.

Activity 2 : Your Opinion Matters !

Directions: The Pantawid Pamilyang Pilipino Program (4Ps) is a conditional cash
transfer program that aims to alleviate poverty. Write the positive and negative
sides of the policy using the table below. Use a separate sheet for your answers.

POSITIVE SIDE NEGATIVE SIDE

1. 1.
2. 2.
3. 3.

Activity 3: Hear Me Out !

Directions: Think of three economic issues or problems in your own community

and give one solution to address the problem using the principles of applied
economics. Write the answers in a separate sheet of paper.

Problem Proposed Solution

1.
2.

3.

Good job ! You are now ready to take the last level of this module which
is your post test. Good luck !

17
 Gauge

Directions: Read carefully each item. Use a separate sheet for your answers. Write
only the letter of the best answer for each test item.
1. This is a government controlled economy:
a. Traditional economy
b. Mixed Economy
c. Market economy
d. Planned Economy

2. Scarcity means ________________.

a. Infinite resources
b. Limited resources
c. Definite resources
d. Unlimited resources

3. This is the value foregone in order to have something else.

a. Opportunity cost
b. Payment
c. Choice
d. Option

4. Because of scarcity, people and economies must make decisions over how to
____________.
a. Allocate resources
b. Import resources
c. Export resources
d. Stagnation of resources

5. This is the right question to be asked when thinking about the goods and
services to be produced that are based on the needs of the consumers.
a. What to produce ?
b. How to produce ?
c. For whom to produce ?
d. How much to produce ?

6. Transactions in this market occur when both buyers and sellers agree on the
price of the given good or service.
a. Traditional economy
b. Command economy
c. Market economy
d. Mixed economy

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7. This is an economy where production and methods, exchange and
distribution of income are made according to customs and traditions.
a. Free Market economy
b. Command economy
c. Traditional economy
d. Mixed economy

8. If the student chooses to review for his/her exam rather than to

attend the party, what will be the opportunity cost ?
a. The benefit of reviewing
b. The benefit of attending the party
c. The joy of wearing your party dress
d. The benefit to go outside

9. It is the opposite of market economy.

a. Planned economy
b. Market economy
c. Mixed economy
d. Traditional economy

10. This economic question answers the problem of whether to utilize the human
labor force or machines be used to do the job.
a. What to produce ?
b. How shall goods be produced ?
c. For whom to produce ?
d. How much shall be produced ?

11. The people in this economy are allowed to own private properties and free to
engage in lawful economic transactions.
a. Traditional economy
b. Command economy
c. Market economy
d. Mixed economy

12. The following are interventions to addressed poverty EXCEPT __________.

a. Provide free meals and housing
b. Income transfers like the 4Ps
c. Discounts given to senior citizens
d . Distribution of contraceptives

13. Which of the following situations is the common cause of poor infrastructure
?
a. Insufficient manpower
b. Insufficient funds to finance the huge cost of the project
c. Insufficient time of the government
d. Insufficient dollar reserves of the country

14. How can the country best addressed the problem of overpopulation?
a. Encourage the people to migrate abroad
b. Send people overseas to work

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 c. Educate people on natural family planning
d. Encourage the use of different contraceptive pills and methods

15. The following are ways to attain food security in a society EXCEPT
__________.
a. Conversion of agricultural lands into industrial plants
b. Enhance the productivity of the agricultural sector
c. Increasing the income of farmers through various means
d. Cultivating a variety of agricultural crops

Very Good! You are now done with this module.

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References
Printed Materials:

Leaño, Roman D., Jr. (2016). Applied Economics For Senior High School.
Intramuros, Manila, Philippines: Mindshaper Co., Inc.

Macalinao, Eloisa M. (2016). Applied Economics For Senior High School.

Intramuros, Manila, Philippines: Unlimited Books Library Services &
Publishing Inc.

Rillo, Julia D. et al. (2008). Economics Basic Principless, Applications and Issues.
Quezon City, Philippines: Vibal Publishing House., Inc.,

Tullao, Tereso S.,Jr. (2016). Applied Economics For A Progressive Philippines.

Quezon City, Philippines: Phoenix Publishing House.
Website:
Gov’t to Strengthen Population, Family Planning Program.
https://www.neda.gov.ph/gov’t-to-strengthen-population-family-planning-
program/

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ANSWER SHEET
PRE-TEST JUMPSTART ENRICHMENT#1 ASSESSMENT ENRICHMEN
1. A Activity1 Scarcity refers to #1 T #2
2. B Answers may the limited 1. E See Table 2
3. C vary resources to satisfy 2. D Economic
4. C man’s unlimited 3. C System
5. A Activity 2 needs. 4. B Lesson 1
6. C 1. Unemployment Concepts of 5. A
7. B 2. Poverty scarcity 6. J
3. Economy 7. I
8. B 4. Infrastructure
Trade-offs,
9. D opportunity cost, 8. G
5. Income
10. B choice, efficiency 9. H
11. B 3 questions 10. F
12. D What to produce ?
13. C How to produce ?
14. C For whom to
15. A produce ?
ASSESSME ENRICHMENT Assessment # 3 DEEPEN GAUGE
NT#2 #3 1. Weak Answers may 1. D 14. C
1. True 1. D infrastructure vary 2. B 15. A
2. False 2. A 2. Income 3. A
3. True 3. E inequality 4. A
4. True 4. C 3. Poverty 5. A
5. True 5. B 4. Investment in 6. C
education 7. C
5. Food security 8. B
9. A
10. B
11. D
12. D
13. B

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