PDF Module-Applied-economics12 Complete

Applied Economics
Grade 12
First Quarter
Module
VENUS AQUINO- VIADO

SHS-Teacher II
This module has the following parts and corresponding icons:
Activity Game
The learning outcome: This will give you an idea of the skills or competencies you are expected
to learn in the module.
What Do I Know / Pre-Test: This part includes an activity that aims to check what you already
know about the lesson to take. If you get all the answers correctly,
you may decide to skip this module.
What I Need to Uncover: This section provides a brief discussion of the lesson. This aims to
help you discover new concepts and skills.
What I Have Learned: This includes questions or blank sentence/paragraph to be filled in

to process what you learned from the lesson.
Additional Activities: In this portion, another activity will be given to you to enrich your
knowledge or skill of the lesson learned. This also tends retention of
learned concepts.
Post-Test: This is a task which aims to evaluate your level of mastery in

achieving the learning competency.
Answer Key This contains answers to all activities in the module.
At the end of this module you will find:
Reference This is a list of all sources used in developing this module.
You will have to answer the last portion about your reaction in this module.
Applied Economics is a very broad yet interesting subject. The different lessons in this
module deal with the basic economic terms, principles, and applications, which are needed in
understanding the Philippine economic growth and progress.
This module provides the students the ability to explore and discover the wide range of
applied economics: analyzation, identification, experimentation, and organization of ideas that
could be used to strengthen the skills of young Filipino entrepreneurs. The world is full of ideas
that is useful in our everyday living, we are facing a major problem and that is the pandemic Covid-
19. Learning is very important for human existence; difficulty arises but let us take this as a
challenge to make economy alive for the continuance of human existence.
1. Use the module with care. Use a separate sheet of paper in answering the exercises.
2. Answer the What I Know before moving on to the other activities.
3. Take time and enjoy reading each topic.
4. Read the instruction carefully.
5. Observe honesty and discipline in doing the activity.
6. At the end of every lesson, activities are provided. You will be using a clean paper, ballpen,
pencil, crayons, scissor and newspaper or magazine in accomplishing the assigned tasks.
7. Answer all the questions after each lesson.
8. Ask the teacher in case you are having difficulty in answering the activities.
This module is the beginning of more learnings about Applied Economics.
“Aim High and Hit the Sky”v.v.

Senior High School
12
APPLIED ECONOMICS
MELC: Differentiate economics as a social science and applied social

science.
• K to 12 BEC CG: ABM_AE12-Ia-d-1
ABM_AE12-Ia-d-2
ABM_AE12-Ia-d-3
MODULE 1
Objectives:
1. Define some basic terms in applied economics.

2. Identify the basic economic problems of the country.
3. Establish how applied economics can be used to solve economic problems in the country.
VENUS AQUINO-VIADO
Teacher II
Activity Game: Explore different terms in the world of applied economics.
Let’s start the game through this activity.
Time to shine…
A. Crossword Puzzle: Look for the words listed below. Encircle the words
which could appear straight across, backward, upward, downward, and
diagonally.
S S R E C U D O R P O P P Z H
L C C N F R E E M A R K E T M ADAM SMITH
APPLIED
U S I I M G U A T F N N E G I
COST
R T A M R J X Y N U R S C J C ECONOMICS
ECONOMETRICS
Z E Z D O T Z D W E A I O M R ECONOMY
FREEMARKET
F Y S B A N E U F J U K N W O MACROECONOMICS
MICROECONOMICS
H A M O J M O M B I X L O L E MARKET
OPPORTUNITY
U O D O U D S C O C X S M W C PRODUCER
RESOURCES
I K C S N R E M E N A O I X O
T L G M O O C I I O O S C T N
S V X C L R C E L T R C S E O
O W Q S L G D E S P H C E K M
C Y T I N U T R O P P O A T I
P V O D I T E K R A M A F M C
M D R Y P O H B I U T T T B S
Pre-Test
Directions: Choose the letter of your answer that best complete the statement. Write your
answer on the space provided.
1. Entrepreneurs do all of the following, EXCEPT:

A. Bear risk from business decisions.
B. Come up with new ideas about what, how, when, and where to produce.
C. Organize labor, land, and capital
D. Own all the resources.
2. To answer the “for whom” question, what does it imply?
A. Business cycles. C. Change in technology
B. Differences of income. D. Global economy.
3. A baker is considered ______________and earns ____________.
A. capital; rent C. labor; rent
B. entrepreneurship; wages D. labor; wages
4. He wrote “The Wealth of Nations”.
A. Adam Smith C. Michael Parkin
B. Karl Marx D. Thomas Jefferson
5. Economics can be defined as social science which explains _________.
A. Choices made by households.
B. Choices made by politicians.
C. Choices that we make as we cope with scarcity.
D. Choices we make when trading in markets.
6. These are things that are used to produce more goods and services.
A. Consumer C. Resources
B. Producer D. Seller
7. This refers to the one who buys goods and services.
A. Consumer C. Producer
B. Demand D. Supply
8. Which process involves the transfer of goods and services to different economics
outlets for allocation to individual consumers?
A. Consumption C. Exchange
B. Distribution D. Production
9. Once the goods are produced, how shall they be distributed? This will be attributed to
the question_______.
A. How much to produce? C. How to produce?
B. For whom to produce? D. What to produce?
10. What does market equilibrium imply?
A. Constant Supply C. Shortage
B. Demand D. Surplus
11. Economics is the study of how people, business, governments, and society’s_______.
A. attain wealth. C. make use of alternativeresources.
B. choose abundance over scarcity. D. use infinite resources.
12. Which of the following statements is correct about economics?
A. Economics is the proper allocation and efficient use of available resources.
B. Economics is the science of choice.
C. Economics is the study of how man could best allocate the scarce resources of
society to satisfy his limited wants.
D. Economics is unessential in a decision-making.
13. All statements are correct about the importance of economics, Except:
A. Economics is important in order to understand problems facing the family.
B. Economics help the government promote growth and improve the quality of
life.
C. Both A and B
D. None of the above.
14. Economics is derived from the Greek word “oikonomia”, which means?
A. Economic management C. Political management
B. Household management D. Social Management
15. What is Macroeconomics?
A. Deals with the economic behavior of the whole economy.
B. Discusses the way on how the individual markets work.
C. It is important as opposite to issues.
D. The prices of individual goods.
What I Need to Uncover
Lesson 1
Revisiting Economics as Social Science
What is Economics?
Economics is the study of what constitutes rational human behavior in the endeavor to
fulfill needs and wants.
In economics, a need is something needed to survive while a want is something that

people desire to have, that they may, or may not, be able to obtain.
It comes from the Geek word “Oikonomia”” meaning “household management”. Some
definitions are as follows:
1. Fajardo- Economics is the proper allocation and efficient use of available resources for
the maximum satisfaction of human wants.
2. Samuelson- Economics is the study of how societies use scarce resources to produce
valuable commodities and distribute them among different people.
3. Nordhaus- Economics is the science of choice. It studies how people choose to use
scarce resources (labor, equipment, and technical, knowledge) to produce various
commodities and distribute these for consumption.
4. Sicat- Economics is a scientific study which deals with how individuals and society
make choices.
5. Castillo- Economics is the study of how man could best allocate and utilize the scarce
resources to satisfy his unlimited wants.
6. Webster- Economics is a branch of knowledge that deals with the production,
distribution and consumption of goods and services.
Let us be familiarized with the importance of Economics in our life:
1. It guides us how to make a living.

2. It teaches us how to use our money wisely.
3. It gives us idea in how to run a business, how to distribute properly our available scarce
resources.
4. With appropriate economic decision and implementation for a better life opportunity.
5. To help government promote growth and improve the quality of life
6. Understanding economics can provide good decision making.
The Nature of Economics:
Economics is a Science. A science is a body of systematic knowledge built upon by

conscious efforts. Its laws and principles are attained after a long series of observations and
experimentations. Economics is concerned with accurate assessment of facts and events about our
material life.
Economics is a classified Social Science. A social science because it deals with the study
of man’s life and how he lives with other men. It is concerned with human beings and his behavior.
It is the study of the relations between people during production, distribution and consumption of
wealth in human society.
Economics has more advantages as a scientific discipline for two main reasons:
1. There is factual information using statistics.

2. Economics can be more expectable or predictable because economic motives of human
beings can be regular and persistent.
Note: Non-economic factors that can be associated with economics problems like culture,
education, social, and political.
Two Branches of Economics
Macroeconomics
- deals with the economic behavior of the whole economy or its aggregates like
government, business, and households.
- the operation of the various aggregates and their interrelationship is analyzed to provide
a profile of the economy as a whole.
Microeconomics
- also known as “Price Theory”
-deals with the economic behavior of individual units such as the consumers, firms,
and the owners of the factors of production. For example, the price of rice, the number of workers,
the income of Mr. Juan.
Divisions of Economics
1. Production- refers to the process of producing goods needed by the households to satisfy
their needs.
Input- factors of production
Output- goods and services that have been created
2. Distribution- the marketing of goods and services t different economic outlets for allocation
to individual consumers.
3. Exchange- a process of transferring goods and services to a person in return for something.
4. Consumption- refers to the proper utilization of economic goods.
5. Public finance- it pertains to the activities of the government regarding taxation,
borrowings, and expenditures.
Factors of Production or Inputs
1. Labor- termed as human resources.

2. Capital- represent the monetary resources companies use to purchase natural resources,
land, and other capital good.
3. Land- consist of free gifts of nature which includes all natural resources above, on, and
below the ground.
4. Foreign exchange- refers to dollar and dollar reserves that the economy has.
5. Entrepreneurs- the organizer and coordinator of the other factor s of production.
Some Major Tools Used by Economist:
1. Logic- It is a science that deals with sound thinking and reasoning. In the process of
interpretation, facts and verifications should be presented in order to arrive at a rational
decision that concerns economic problems.
2. Statistics- It is a branch of mathematics that connects with the analysis and interpretation
of numerical data. It deals with the process of gathering, charting, and evaluating data to
test the validity of a certain hypothesis.
3. Mathematics- It is a science that deals with numbers and their operations. Economics is the
most quantifiable discipline among social sciences. It can calculate population, income,
national product, aggregate number of firms and many more. Mathematics helps
economists solve concrete problems involving numbers like profit margin of a firm,
calculate the Gross National Product and Gross Domestic Product of a country.
What Have I Learned?
Activity 1
Directions: Consider the following scenario and fill in the columns of what is being
asked.
You are stranded on an island. What are your needs for survival? What would you
want to have with you to make your stay more comfortable/endurable? List all your
possible answers.
Needs Wants
Activity 2
Define the following terms in your own words,
a) Needs
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
b) Wants
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________
c) Resources
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
d) Scarcity
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
Activity 3 In this activity the learners will be able to identify the basic terms in
Applied Economics.
Directions: Write T if the statement is TRUE and F if it is FALSE. Write your answer
in the space provided.
1. Economics is a social science because it deals with human nature.

2. Allocation of resources means apportionment of available resources.
3. Economics is classified as a social science because it deals with the study of man’s
life and how he lives with other man.
4. Economics is a science with systematic knowledge, its laws and principles are arrived
at only after a long series of observations and experimentations.
5. Scarcity exists, people cannot choose between alternatives.
6. Economics is an exact science.
7. Economics is the study of economic activities of a man.
8. Goods and services are scarce.
9. Labor is also considered as “human resources”.
10. Land, labor, foreign exchange, capital, and entrepreneurs are factors of production.
Activity 4 Directions: Identify the items below either capital, entrepreneur,
labor or land as factors in production. No item shall be used twice and make
sure that all columns will be filled up.
Cellphone Delivery vans Bill Gates Ayala Land, Inc. Computer

Forest Factory worker Doctor Company driver Henry Sy
Natural gas Lucio Tan Forklifts Mountain Oceans
Teacher Nurse Minerals Tractor PLDT
Capital Entrepreneur Land

Labor
“Monetary/ Man- “Enterpriser/ “Natural
“Human Efforts”
Made Inputs” Organizer” Resources”
Activity 5 Directions: Write what is being asked in the following activity. Use the
RUBRICS as your guide in accomplishing your output. Write your answer legibly on
the space provided.
Problems confronting our Does it have something to do with economics?

country Justify your answer
Scoring Rubrics
Criteria 5 4 3 2 1
Reflective Tops Meet Reflection Reflection Does not
thinking and expectations expectations attempts to and analysis show any
analysis and explains and explains explain the are learning
thoroughly roughly the experience ambiguous experience
the experience and analysis
experience with rough is ambiguous
with in-depth analysis
analysis
Making Excellent Very Satisfactory Approaching Poor in
connections connection satisfactory connection of progress for making
from past and connection of past and making connections
other past future goals connections
experiences experiences
with future and future
goals goals
Enrichment Activity:
Directions: Collect and put inside the box at least two issues, news clippings or photos
pertaining to Philippine economy. (You are allowed to sketch or draw). Use the RUBRICS
as your guide in accomplishing your output. Discuss briefly how these issues affect you
as a student:
Number 1
Number 2
Scoring Rubrics
Criteria 5 4 3 2 1
Relevance of Shows Shows Most of the Some of the Few of the
material to exemplary excellent materials materials are materials are
the idea connection of relevance of selected are relevant to relevant to
materials to materials to relevant to the main idea the main idea
the main idea the main idea the main idea
Variety of Materials Variety of Selected Adequate Limited
materials used are materials materials are variety of variety of
use beyond used are good variety materials are materials are
expectation to excellent and used used
develop the carefully
main idea selected
Visual Very Dynamic Somewhat Limited No impact at
impact dynamic dynamic impact all
What I Have Learned?
Establish Importance of Economics
Directions: Identify if the statement below refers to Microeconomics, Macroeconomics, or

Both. Write your answer in the space provided.
1. Predicting how consumers will react to higher gasoline prices.
2. Calculating the rate of unemployment.
3. Analyzing the consequences of a free trade agreement between two

countries.
4. Explaining the effect of higher wage rates on a company's supply
decision.
5. Forecasting when a recession likely will begin and end.
6. Explaining the effect of higher wages on total production.
7. Tracing the relationship between the money supply and the inflation
rate.
8. Studying how consumer demand reacts to advertising.
9. Guiding a corporation about an investment proposal.
10. Considering how mandatory health insurance will affect small business.
Post-Test
I. Directions: Choose the letter of your answer that best complete the statement.
Write your answer on the space provided.
1. Economics is the study of how people, business, governments, and society’s ________.
A. attain wealth. C. make use of alternative resources.
B. choose abundance over scarcity. D. use infinite resources.
2. Which of the following statements is correct about economics?
A. Economics is the proper allocation and efficient use of available resources.
B. Economics is the science of choice.
C. Economics is the study of how man could best allocate the scarce resources of
society to satisfy his limited wants.
D. Economics is unessential in a decision-making.
3. All statements are correct about the importance of economics, Except:
A. Economics is important in order to understand problems facing the family.
B. Economics help the government promote growth and improve the quality of
life.
C. Both A and B
4. Economics is derived from the Greek word “oikonomia”, which means?
A. Economic management C. Political management
B. Household management D. Social Management
5. What is Macroeconomics?
A. Deals with the economic behavior of the whole economy.
B. Discusses the way on how the individual markets work.
C. It is important as opposite to issues.
D. The prices of individual goods.
6. These are things that are used to produce more goods and services.
A. Consumer C. Resources
B. Producer D. Seller
7. This refers to the one who buys goods and services.
A. Consumer C. Producer
B. Demand D. Supply
8. Which process involves the transfer of goods and services to different economics
outlets for allocation to individual consumers?
A. Consumption C. Exchange
B. Distribution D. Production
9. Once the goods are produced, how shall they be distributed?
A. How much to produce? C. How to produce?
B. For whom to produce? D. What to produce?
10. What does market equilibrium imply?
A. Constant Supply C. Shortage
B. Demand D. Surplus
11. Entrepreneurs do all of the following, EXCEPT:
A. Bear risk from business decisions.
B. Come up with new ideas about what, how, when, and where to produce.
C. Organize labor, land, and capital
D. Own all the resources.
12. To answer the “for whom” question, what does it imply?
A. Business cycles. C. Change in technology
B. Differences of income. D. Global economy.
13. A baker is considered ______________and earns ____________.
A. capital; rent C. labor; rent
B. entrepreneurship; wages D. labor; wages
14. He wrote The “Wealth of Nations”.
A. Adam Smith C. Michael Parkin
B. Karl Marx D. Thomas Jefferson
15. Economics can be defined as social science which explains _________.
A. Choices made by households.
B. Choices made by politicians.
C. Choices that we make as we cope with scarcity.
D. Choices we make when trading in markets.
Answer Key: Activity Game
S S R E C U D O R P O P P Z H APPLIED
ECONOMICS
L C C N F R E E M A R K E T M ECONOMETRICS
U S I I M G U A T F N N E G I MACROECONOMICS
MICROECONOMICS
R T A M R J X Y N U R S C J C RESOURCES
Z E Z D O T Z D W E A I O M R MARKET
ECONOMY
F Y S B A N E U F J U K N W O ADAM SMITH
FREEMARKET
H A M O J M O M B I X L O L E
OPPORTUNITY
U O D O U D S C O C X S M W C COST
PRODUCER
I K C S N R E M E N A O I X O
T L G M O O C I I O O S C T N
S V X C L R C E L T R C S E O
O W Q S L G D E S P H C E K M
C Y T I N U T R O P P O A T I
P V O D I T E K R A M A F M C
M D R Y P O H B I U T T T B S
Pre-Test
1. D
2. B
3. D
4. A
5. C
6. C
7. A
8. C
9. B
10. A
11. C
12. C
13. D
14. B
15. A
Matching Type
Economic Terms Explanations

Opportunity Cost B
Products F
Economy J
Production H
Firms G
Foreign Exchange D
Entrepreneurs C
Public Finance A
Invisible hand I
Distribution E
A. Answers may vary
Needs Wants
Shelter Chocolates
Clothes Makeups
Fruits/Vegetables Necklace
Medicines Ring
Water Smart Televisions
Blankets Swimming pool
Books Signature Clothes
Shoes Sportscar
Education Aircon
Definition
a) Needs- something that is needed to survive.

b) Wants- are desires that can be satisfied by consuming a good, service, or leisure activity.
c) Resources - a service or asset used to produce goods and services that meet human needs and
wants.
d) Scarcity- a limit to the supply of productive resources or consumer goods in relation to
producer’s or consumer’s demand.
True/ False:
1. T
2. T
3. T
4. T
5. F
6. F
7. T
8. T
9. T
10.T
Table 1
Capital Entrepreneur
Labor Land
“Monetary/ Man- “Enterpriser/
“Human Efforts” “Natural Resources”
Made Inputs” Organizer”
Cellphone Henry Sy Teacher Natural gas
Forklifts PLDT Nurse Forest
Delivery vans Lucio Tan Factory worker Mountain
Tractor Bill Gates Doctor Oceans
Computer Ayala Land, Inc. Company driver Minerals
Table 2
Scoring Rubrics
Criteria 5 4 3 2 1
Relevance of Shows Shows Most of the Some of the Few of the
material to exemplary excellent materials materials are materials are
the idea connection of relevance of selected are relevant to relevant to
materials to materials to relevant to the main idea the main idea
the main idea the main idea the main idea
Variety of Materials Variety of Selected Adequate Limited
materials used are materials materials are variety of variety of
use beyond used are good variety materials are materials are
expectation to excellent and used used
develop the carefully
main idea selected
Visual Very Dynamic Somewhat Limited No impact at
impact dynamic dynamic impact all
Scoring Rubric
Criteria 5 4 3 2 1
Reflective Tops Meet Reflection Reflection Does not
analysis and explains and explains explain the are learning
thoroughly roughly the experience ambiguous experience
experience with rough is ambiguous
analysis
Making Excellent Very Satisfactory Approaching Poor in
connections connection satisfactory connection of progress for making
from past and connection of past and making connections
other past future goals connections
experiences experiences
with future and future
goals goals
Multiple Choice:
Post- Test
1. C
2. C
3. D
4. B
5. A
6. C
7. A
8. C
9. B
10.A
11. D
12. B
13. D
14. A
15. C
References:
Case, Karl E. & Fair, Ray C. (19990. Principles of Economics. (5th ed.). Prentice Hall, ISBN 0-13-
961905-4
Castillo, Andres V. Philippine Economics. Revised Edition, Manila, 1989
Leano, Jr. Roman, Applied Economics for Senior high School. Mindshapers Co., INC. Manila,
2016
Senior High School
12
APPLIED ECONOMICS
MELC: Examine the utility and application of applied economics to
solve economic issues and problems.
• K to 12 BEC CG: ABM_AE12-Ia-d-1
MODULE 2
Objectives:
1. Explain the basic economic problems and its impact to Philippine economy.
2. Discuss why economics is an applied science and its significance.
3. Describe how applied economics work in solving economic problems.
Prepared by:
VENUS A. VIADO
SHS- TII
Activity Game
Time to shine…
Economics as applied science. In this game, learners will be able to encounter words that
surrounds the economic world.
A. Crossword Puzzle: Look for the words listed below. Encircle the words which could
appear straight across, backward, upward, downward, and diagonally.
M S V T N E M T S E V N I Q G
T F Z P Y X E Q C P Q R W Z P
Y I P R O D U C T I O N A H M COMMODITIES
T N V I F G P N E R F T G D S DEMAND
EQUILIBRIUM
I F V C N F C P Q K H S E J U INFLATION
INTEREST
T L N E Z W Y X U H W E Y C P INVESTMENT
N A Y G V P S E I Z I R C R P PRICE
PROFIT
A T T N E M Y O L P M E N U L PRODUCTION
POVERTY
U I V H D J Q Y I C U T A S Y QUANTITY
Q O V O N F S H B I F N A T M SUPPLY
UNEMPLOYMENT
P N U L A X U A R F N I O I J WAGE
V T Y Q M N R J I Z M U M F K
L Y T R E V O P U N G K X O F
R I Q P D U D T M Q U K T R E
X S E I T I D O M M O C O P W
Guide questions:
1. Cite your observation concerning the words in this word search activity.
2. Are these terms familiar to you?
3. How these terms related to economics as an applied science?
What Do I Know?
(Pre-Test)
Direction: Write the letter of the correct term opposite of its meaning.
1. Value of money A. Barter
2. The human effort required to produce B. Commodities

goods and services.
3. A situation when no suitable jobs C. Consumer

available those who are willing to work.
4. It is an excess of quantity demanded over D. Goods

quantity supplied.
5. Anyone who uses goods and/or services. E. Labor
6. Tangible items of value and can be seen. F. Purchasing power
7. Raw materials or primary agricultural G. Shortage

products that can be bought and sold in
the market.
8. It is defined as having a strong desire for H. Theory

something.
9. A set of organized principles that explain and I. Unemployment

guide analysis.
10. The exchange of one good or service to another. J. Want
K. Work Stoppage
LESSON 2
ECONOMICS AS AN APPLIED SCIENCE
“Economics is a study of economic activities of a man. It is only concerned with the

wealth-getting and wealth-using activities of man”.
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).
Say wrote about applying the general principles of political economy. In 1848, Mill used
the term in his work Principles of Political with Some of their Applications to Social Philosophy.
Need to know about Applied Economics:

✓ It is the study of economics in relation to real world situation.
✓ It is the application of economic principles and theories to real situations.
✓ Predictions of the possible economic outcomes.
✓ The study of observing how theories work in practice.
✓ Deals on the application of economic theories and principles to real world situations with
the desired aim of predicting potential outcomes.
✓ It is the application of basic assumptions of economics to real-world situations, both
isolated or interrelated with sets of currents circumstances.
Importance of applying economic theories:
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 negative or
positive effect.
2. Applied economics acts as a mechanism to determine what steps can reasonably be taken
to improve the current economic situation.
3. Applied economics can teach valuable lessons on hoe to avoid the recurrence of a negative
situation or least minimize the impact.
What is Econometrics?
It is the application of statistical and mathematical theories to economics for the purpose
of testing hypotheses and forecasting future trends. Example, A real-life application such as to
study the hypothesis that as a person’s income increases, spending increases.
Basic Economic Problems:
1. What to Produce? - Goods and services to be produced are based on the needs of the
consumers. Factors to be considered:
1.1 Availability of resources;
1.2 Physical environment; and
1.3 Customs and traditions.
2. How to Produce? - Equally important is the system’s task of selecting the proper
combination of economic resources.
3. For whom shall goods and services be produced? - How are the existing pattern of
income distribution can be changed
through government policies.
4. Are the country’s resources being utilized? - When resources are scarce, it is not
in the rightness of things to keep some
of the available resources idle.
Resources must be properly utilized.
5. Is the economy’s capacity to produce goods - This is essentially a dynamic

Growing or remaining the same overtime? problem, the problem of growth with
cycles.
Additional Activities
Why economics is an applied science?
Activity 1 Directions: You are given P 1,000.00 as an allowance for one week. How are you
going to spend your money wisely? List your choices and describe the advantages and
disadvantages of your choice. Use the RUBRICS as your guide in accomplishing your output.
Advantage Disadvantages
Choice No. 1
Choice No. 2
Choice No. 3
Scoring Rubrics
Criteria 5 4 3 2 1
Discussion Discussion Discussion Discussion Discussion
contains all contains contains contains contains very
Content
of the almost all of most of the some of the few of the
advantages the advantages advantages advantages
and advantages and and and
disadvantages and disadvantages disadvantages disadvantages
information disadvantages information information information
information
Flow of Simple, clear Simple, clear Clear but not Complete but Not well
Ideas and complete complete but complete not clear coordinated
not clear
Activity 2 Directions: Answer the following questions. If you are an economic
planner, how can you solve unemployment in our country? List down your alternatives. Use
the RUBRICS as your guide in accomplishing your output.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
What are the three common problems of an economy? Do you have any solutions for these?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Scoring Rubrics
Criteria 5 4 3 2 1
Content All solutions Most of the Some of the Only two Only one
provided are solutions solutions solutions solution is
correct provided are provided are provided are provided
correct correct correct
Flow of Simple, clear Simple and Clear but not Complete but Not well
ideas and complete complete but complete not clear designed
not clear
Post-Test
The learners shall be able to explain basic economic problems.
I. Directions: Choose the letter of the correct answer and write it down on the
space provided for in each item.
1. The study of economics in relation to real world situations as opposed to the theory of
economics?
A. Applied economics C. Macroeconomics
B. Economics D. Pure economics
2. Which of the following statements is correct about applied economics?
A. Avoid the recurrence of a negative situation, or at least minimize the impact.
B. Determine what steps can reasonably be taken to improve the current economic
situation.
C. Sweep aside all attempts to determine the worse or better situation.
D. A and B
3. It refers to the needs of the consumers.
A. For whom to produce? C. How much to produce?
B. How to produce? D. What to produce?
4. What is the use of applied economics in our everyday situation?
A. Analytically review potential outcomes.
B. Apply statistical and mathematical theories.
C. Increase production.
D. Validate economic theories.
5. What is the best action to be taken in a period of scarcity?
A. Allocate resources. C. Import resources.
B. Export resources D. Stagnation of resources.
6. What can be done to solve unemployment problem in the Philippines?
A. Appropriate economic policies for labor industries.
B. Improving the economic environment in the rural areas.
C. Proper coordination between government and private sector to solve job mismatch.
D. All of the above.
7. Scarcity can lead to many problems in our everyday living. Which of the following does
not illustrate such problem?
A. Effect of climate change such as el nino and la nina.
B. Increase of prices of different commodities.
C. It can lead to chaos among the society.
D. Opportunity for producers to increase their income.
8. If you are a rational thinker, what could be the best action you would consider in decision-
making?
A. I will consider my beliefs and traditions.
B. I will consider my needs and wants in making a decision.
C. I will consider the occasion that I am attending to.
D. I will consider the importance of opportunity cost in every situation.
Post-Test
The learners shall be able to describe basic economic problems.
II. Directions: Economic system is faced with different problems. Choose the correct
answer that describes the given statement. Write the letter of the answer on the
space provided before each number.
1. Once the goods are produced, how shall they be distributed?
2. The problem of growth in cycles.
3. Availability of resources.
4. Allocation of resources.
5. When resources are scarce, it is not in the exactness of things to keep some of the
available resources idle.
6. Physical environment and traditions or customs of people.
7. Selecting the proper combination of economic resources in producing the right
amount of output.
8. Goods and services to be produced are based on the needs of the consumers.
9. The quality of output must come first before quantity.
10. Government all over the world are exploring the possibilities of achieving a growth
rate.
A. How to produce?
B. Are the country’s resources being utilized?
C. For whom shall goods and services be produced?
D. What to produce?
E. Is the economy’s capacity to produce goods growing or decreasing?
Answer Key
Crossword Puzzle
M S V T N E M T S E V N I Q G
T F Z P Y X E Q C P Q R W Z P
Y I P R O D U C T I O N A H M COMMODITIES
T N V I F G P N E R F T G D S DEMAND
EQUILIBRIUM
I F V C N F C P Q K H S E J U INFLATION
T L N E Z W Y X U H W E Y C P INTEREST
INVESTMENT
N A Y G V P S E I Z I R C R P PRICE
A T T N E M Y O L P M E N U L PROFIT
PRODUCTION
U I V H D J Q Y I C U T A S Y POVERTY
QUANTITY
Q O V O N F S H B I F N A T M
SUPPLY
P N U L A X U A R F N I O I J UNEMPLOYMENT
WAGE
V T Y Q M N R J I Z M U M F K
L Y T R E V O P U N G K X O F
R I Q P D U D T M Q U K T R E
X S E I T I D O M M O C O P W
B. Pre-test
1. F
2. E
3. I
4. G
5. C
6. B
7. D
8. J
9. H
10. A
Scoring Rubrics
Criteria 5 4 3 2 1
Discussion Discussion Discussion Discussion Discussion
contains all contains contains contains contains very
Content
of the almost all of most of the some of the few of the
advantages the advantages advantages advantages
and advantages and and and
disadvantages and disadvantages disadvantages disadvantages
information disadvantages information information information
information
Flow of Simple, clear Simple, clear Clear but not Complete but Not well
Ideas and complete complete but complete not clear coordinated
not clear
Essay:
Answer may vary
Criteria 5 4 3 2 1
Content All solutions Most of the Some of the Only two Only one
provided are solutions solutions solutions solution is
correct provided are provided are provided are provided
correct correct correct
Flow of Simple, clear Simple and Clear but not Complete but Not well
ideas and complete complete but complete not clear designed
not clear
The three economic problems are: 1. What to produce?

2 How to produce?
3 For whom shall goods and services
produced?
I. Post-test
1. A
2. D
3. D
4. B
5. A
6. D
7. D
8. D
II. Post-test
1. C
2. E
3. D
4. C
5. B
6. C
7. A
8. D
9. A
10. E
References:
961905-4
2016
Senior High School
12
APPLIED ECONOMICS
MELC: Analyze market demand, market supply and market
equilibrium.
• K to 12 BEC CG: ABM_AE12-Ie-h-4
ABM_AE12-Ie-h-5
MODULE 3
Objectives:
1. Give the law of supply and demand.
2. Explain the common factors affecting the demand and supply.
Prepared by:
VENUS A. VIADO
SHS- TII
Pre-Test
This activity will explain how prices of goods and services are determined.
Direction: Write the letter of the correct answer in the space provided before
each number.
1. What will happen when there is a shortage in a market?

A. Consumers are willing to buy more of the good at the current price.
B. Firms are willing to sell more of the good at the current price.
C. Quantity supplied exceeds quantity demanded.
D. The equilibrium price is below zero.
2. If the real income of a consumer decreases and, as a result, his demand for product X
increases, it can be concluded that product X is an _____________.
A. Complementary goods C. Normal goods
B. Inferior goods D. Substitute goods
3. All are determinants of demand Except.
A. Income C. Prices of related goods
B. Price expectations D. Technology
4. Which of the following is true?
A. The lower the price of the good, the bigger the quantity that will be demanded
by the buyer.
B. The lower the price of the good, the smaller the quantity that will be offered by
the supplier.
C. The supplies of inputs used affect the supply of a good.
D. All statements are true.
5. He coined the term “market equilibrium”.
A. Adam Smith C. David Ricardo
B. Alfred Marshall D. Samuel Fajardo
6. What is the other term used for equilibrium?
A. Balance C. Static
B. Stable D. None of the above
7. If the market price is above the equilibrium price,quantity supplied is greater than
quantity demanded what will be created?
A. Constant demand C. Shortage
B. Constant supply D. Surplus
8. What does ceteris paribus assumes?
A. Non-price is constant C. Price factor is constant
B. Non-price factor is not constant D. Price factor is not constant
9. Which of the following is NOT a determinant of a supply?
A. Cost of production C. Tastes and Preferences
B. Number of sellers D. Technology
10. What will happen if the price of a good increases?
A. The demand for complementary goods will increase.
B. The demand for the good will decrease.
C. The demand for the good will increase.
D. The demand for substitute goods will increase.
11. What is quantity demanded?
A. The amount of a good that consumers plan to purchase at a particular price.
B. Independent of the price of the good.
C. Independent of consumers' buying plans.
D. Always equal to the equilibrium quantity
12. The law of demand states that the quantity of a good demanded varies because
____________.
A. inversely with its price. C. directly with income.
B. directly with population. D. inversely with the price of substitute goods.
13. Which of the following influences people's buying plans and varies moving along a
demand curve?
A. Income C. The price of the good
B. Preferences D. The prices of related goods
14. Which statement that explains interaction of supply and demand?
A. Both the prices and the quantities of goods and services.
B. The quantities of goods and services but not their prices.
C. The prices of goods and services but not their quantities.
D. Neither the prices nor the quantities of goods and services.
15. What is the implication when quantity demanded equals quantity supplied?
A. The government must be intervening in the market.
B. There is a shortage.
C. There is a surplus.
D. None of the above
What Do I Need to Uncover?
Lesson 3
Demand and Supply
Meaning of Demand and Supply
Demand means the desire for a particular good backed up by sufficient purchasing power.
The term demand signifies the ability or the willingness to buy a particular commodity at a given
point of time.
Supply, on the hand, is the quantity of a commodity that is in the market and available for
purchase at particular price. It is the amount of goods and services available for sale at a given
prices in a given period of time and place.
What is a Market?
Market is a place where buyers and sellers interact with each other and that exchange takes place
among them. In the market, there are different buyers and sellers who will buy or sell different
quantities of a commodity.
What is a Demand Schedule?
Demand schedule reflects the quantities of goods and services demanded by a consumer at any
given price.
What is a Supply Schedule?
Supply schedule shows the different quantities that are offered for sale at various prices.
The Law of Demand and Supply
The law of demand may be stated as “the quantity of a commodity which buyers will buy
at a given time and place will vary inversely with the price.” This means that as price increases,
quantity demanded decreases, and as price decreases, quantity demanded increases other things
are constant.
These can be explained by two reasons:
1. Income Effect- At lower prices, an individual has a greater purchasing power.

This means, he can buy more goods and services. But at higher prices, naturally,
he can buy less.
2. Substitution Effect- Consumers tend to buy goods with lower prices. In case the
price of a product that they are buying increases, they look for substitutes whose
prices are lower. Thus, the demand for higher priced goods will decrease.
All about the Law of Demand
What is Demand?
Demand is the quantity of a product that a buyer is willing and able to purchase at a given
price. The law of demand states that, all else equal, as the price of a good or service increases,
consumer demand for the good or service will decrease. Now, think about a consumer who is in
the market to buy sugar from a store. The law of demand suggests that the consumer will purchase
more sugar as the price for sugar decreases.
The demand curve plotted below explains that as price increases, the quantity demanded
decreases. Alternatively, as the price decreases, the quantity demanded increases. An inverse
relationship exists between price and quantity when it comes to the demand curve.
Price Price
P 100 ---------
P 75 -------------------
Demand Demand
Quantity 20 70 Quantity
Price Quantity Supplied
Determinants of Demand
1. Income- People buy more goods and services when their income increases, but will buy
less if their income decreases, thus, affecting the demand for goods and services.
2. Population- More people means more demand for goods and services.
3. Tastes and Preferences- Demand for goods and services increase when people like or
prefer them.
4. Price Expectations- When people expect the prices of goods, especially basic
commodities like rice, soap, cooking oil, or sugar to increase tomorrow or next week,
they will buy more of these goods. The reason for such consumer’s behavior is to
economize.
5. Prices of Related Goods- When the price of a certain good increases, people tend to
buy substitute products.
But, for complimentary products (those that goes together) like bow and arrow, sugar and
coffee. If the price of sugar increases, the price of coffee increases. But, if the price for
sugar decreases, the demand for coffee also decreases.
The Law of Supply
Supply is the quantity of a product that a seller is willing to sell at a given price.
The law of supply states that, all else equal, an increase in price results in an increase in
the quantity supplied. Imagine a bakery that produces and sells cookies. The law of supply
states that the tailor is willing to increase production and sell more clothes if the price he
can sell the clothes for increases. Thus, he is willing to produce more cookies if they can
be sold for P 100.00 than if they are sold for P 75.00. This relationship between price and
quantity is modeled below.
P
Price Supply
Supply
P 100 ---------------
P 75 --------
Demand D
20 70
Price Quantity Supplied
The Law of Supply states that the quantity offered for sale will vary directly with
price. This means that as price increases quantity supplied also increases; and as price
decreases, quantity supplied also decreases.
Determinants of Supply
1. Technology- refers to techniques of production. Innovation of technology increases the

production.
2. Cost of production- we have a tendency to take into matter the worth of raw materials
as well as the cost of labor.
3. Number of Sellers-more sellers or more factories mean an expansion in supply.
4. Taxes and Subsidies- certain taxes increase cost of production. Government extends
tax exemptions to some new and necessary industries to encourage growth.
5. Weather- production goods also changes on weather conditions.
. Activity Game
The Law of Supply and Demand.

Activity 1 Let’s have some mental exercises.
Direction: Arrange the jumbled letters in the box to answer the following guide questions. Write
your answer in the space provided.
1. u s p p y l
2. d m n d e a
3. c o m e i n f f e c t
4. k e m a t r
5. s u s b t i t u t e
Guide Questions:
1. The quantity of a commodity that is in the market and available for purchase at a particular
price. Answer: ______________________
2. The desire for a particular good backed up by sufficient purchasing power.
Answer: ______________________
3. At lower prices, an individual has a greater purchasing power. But at higher prices, he can
buy less. Answer: ____________________
4. It is a place where buyers and sellers interact with each other and that exchange takes place
among them. Answer: ____________________
5. It is a product or service a consumer sees as the same or similar to another product.
Answer: ____________________
Enrichment Activities
Direction: Let us try to analyze the given example and answer the guide questions correctly.
Table 1
Hypothetical Demand of Pork in the Market
Price of Pork Quantity Demand in

per Kilo Kilos
Php 350.00 40
300.00 60
250.00 80
200.00 100
150.00 120
Guide questions:
1. State your observation based from the table 1.

2. What happens to the quantity demand if the price is Php 150.00?
3. If the price of pork increases to Php 350.00, what is the quantity demand as shown in the
table.
4. Define briefly the demand schedule.
Table 2
Hypothetical Supply of Corn in the Market
Price of Corn Quantity Supply per Sack

per Sack
Php 700 200
600 140
500 90
300 70
200 30
1. State your observation based from the table 2.

2. What happens to the quantity supply if the price is Php 700.00?
3. If the price of corn per sack decreases to Php 200.00, what is the quantity supply as shown
in the table.
4. Define briefly the supply schedule.
Direction: Create your own demand schedule using the chart below.
Price of commodity X Quantity demand
Let’s go through the graph
Supply
P 200.00 --------------------------------------------
Price
P170.00 -------------------------------------------
P140.00 -------------------------------------------
0 100 200 300

Quantity
Directions: Choose the letter of the correct answer and give a brief explanation.
Refer to the graph above. The equilibrium price and quantity as indicated is:
A. P170 and 200 C. Php140.00 and Php100

B. P200 and 200 D. Php 200.00 and 300
Name: ______________________________________________________
Grade & Section: ___________________________Date: _____________ Score
Explain the Law of Supply and Demand
Graphic Organizer
Directions: Write your answer inside the box to identify the factors that affect the supply.
Explain it briefly.
Determinants of
Supply
Name: ______________________________________________________
Grade & Section: ___________________________Date: _____________
Explain the Law of Supply and Demand.
Graphic organizer
Directions: Write your answer inside the box to identify the factors that
affect the supply. Explain it briefly
Determinants of
Demand
Post-Test
How Much Did You Learn?
I. Directions: The scenarios below demonstrate how supply and demand influence the
market price. Complete the following table below by identifying the Change in Supply
and Demand either it decreases, increases, or no change at all.
Scenario Change in Supply Change in Demand
A disease outbreak among coconut fields in the

Visayas region. (coconut)
Philippines experiences perfect weather during

their growing season. (corn)
The Philippines enters into a free-trade agreement

with the ASEAN. (rice)
A well-conducted and publicized study finds that

food is safe to consume and has no credible health
concerns (corn)
The income of the average citizen increases (beef)
Consumers develop a passion for whitening

products . (soap with glutathione )
There is a well-publicized disease outbreak among

swine. (Pork)
A health report is released that food with high

cholesterol is linked to heart disease. (shrimp)
Post-Test
Explain The Law of Supply and Law of Demand.
II. Directions: Choose the correct answer from the choices below that best
describes the given statements.
1. Demand for goods and services increases when people like or prefer them.
2. When the price of a certain good increases, people tend to buy substitute
products.
3. People buy more goods and services when their income increases but will buy
less when their income decreases.
4. Allocation of resources. When people expect the prices of goods, especially
basic commodities such as rice, soap, cooking oil, or sugar to increase.
5. More people means more demand for goods and services.
6. The price of raw materials which are needed together with the cost of labor.
7. Production of goods also depends weather conditions.
8. Governments extends tax exemptions for new industries to stimulate growth
and financial grants to induce businessman to produce more.
9. Refers to techniques or methods of production.
10. More sellers or more factories mean an increase in supply. Nevertheless,
less sellers or factories mean less supply.
A. Cost of production F. Population
B. Income G. Tastes and preferences
C. Number of sellers H. Taxes and subsidies
D. Price expectations I. Technology
E. Prices of related goods J. Telecommunication
K. Weather
Answer Key:
Pre-test
1. A
2. B
3. D
4. D
5. B
6. A
7. C
8. C
9. C
10. D
11. A
12. A
13. B
14. A
15. D
Jumbled Letters
Guide Questions:
1. The quantity of a commodity that is in the market and available for purchase at particular
price. Answer: Supply
2. The desire for a particular good backed up by sufficient purchasing power.
Answer: Demand
3. At lower prices, an individual has a greater purchasing power. But at higher prices, he can
buy less. Answer: Income effect
4. It is a place where buyers and sellers interact with each other and that exchange takes place
among them. Answer: Market
5. It is a product or service a consumer sees as the same or similar to another product. Answer:
Substitute
Table 1
Hypothetical Demand of Pork in the Market
Price of Pork Quantity Demand in

per Kilo Kilos
Php 350.00 40
300.00 60
250.00 80
200.00 100
150.00 120
Guide questions:
1. State your observation based on table 1.
Ans. The price of the pork increases the quantity demand decreases.
2. What happens to the quantity demand if the price is Php 150.00?
Ans. Based on the table if the price of the pork is Php150.00 , the quantity demand of
pork in kilos increases.
3. If the price of pork increases to Php 350.00, what is the quantity demand as shown in the
table.
Ans. Quantity demand decreases.
Ans. If the price of pork increases to Php 350.00 the quantity demand decreases.
4. Define the demand schedule.
Ans. Demand schedule refers to table showing the quantities of a product that would be
purchased at various prices at a given time and place.
Table 2
Hypothetical Supply of Corn in the Market
Price of Corn Quantity supply per sack

Per Sack
Php 700 200
600 140
500 90
300 70
200 30
1. State your observation based on table 2.

Ans. If the price of a corn per sack increases the quantity supply increases
2. What happens to the quantity supply if the price is Php 700.00?
Ans. The quantity supply increases too.
3. If the price of corn per sack decreases to Php 200.00, what is the quantity supply as shown
in the table.
Ans. The price of corn decreases to Php 200.00 the quantity supply decreases.
4. Define the supply schedule.
Ans. It is a table showing the quantities of a product that would be marketed at different
prices at a given time and place.
Create your own demand schedule using the chart below.
Answer of learners will vary.
Price of commodity x Quantity demand

Php
250.00 10
200.00 20
150.00 30
100.00 40
50.00 50
Answer in graph interpretation:
The equilibrium of price and quantity of product x meet at the price of Php170.00 with
200 as the number of quantities. This explains the assumption where all other things are equal.
(Consider the varied answer of learners).
Determinants of Supply
1. Technology
2. Cost of production
3. Number of sellers
4. Taxes and subsidies
5. Weather
Determinants of demand
1. Income
2. Population
3. Tastes and preferences
4. Price expectations
5. Prices of Related goods
Post-Test
How Much Did You Learn?
I. Directions: The scenarios below demonstrate how supply and demand influence the
market price. Complete the following table below by identifying the Change in Supply
and Demand either it decreases, increases, or no change at all.
Scenario Change in Change in Demand

Supply
A disease outbreak among coconut fields in the Decrease No change
Visayas region. (coconut)
Philippines experiences perfect weather during Increase Increase

their growing season. (corn)
The Philippines enters into a free-trade agreement Increase Increase

with the ASEAN. (rice)
A well-conducted and publicized study finds that Increase Increase

food is safe to consume and has no credible health
concerns (corn)
The income of the average citizen increases (beef) Increase Increase
Consumers develop a passion for whitening Increase Increase

products . (soap with glutathione )
There is a well-publicized disease outbreak Decrease Decrease

among swine. (Pork)
A health report is released that food with high Decrease Decrease

cholesterol is linked to heart disease. (shrimp)
Multiple choice: Explain the law of supply and demand.
1. G
2. E
3. B
4. D
5. F
6. A
7. K
8. H
9. I
10. C
References:
961905-4
2016
Senior High School
12
APPLIED ECONOMICS
MELC: Determine the implications of market pricing and market
equilibrium.
• K to 12 BEC CG: ABM_AE12-Ie-h-6
MODULE 4
Objectives:
1. Compare the prices of commodities and analyze its impact to the consumers.
2. Give the importance of knowing the prices of basic commodities.
3. Analyze the current prices of commodities in the market.
Prepared by:
VENUS A. VIADO
SHS- TII
Let’s get ready to rumble bubble!
A Directions: Arrange the jumbled letters about market pricing and
answer the guide questions correctly. You can do it!
PCERI
ICOMEN FFECTE LASTICITYE
Guide questions:
1. What are the similarities of the given economic terms?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
2. Which of the following terms is new to you?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
3. In your opinion, are they considered part of the Philippine economy?
____________________________________________________________________________________________________________
____________________________________________________________________________________________________________
____________________________________________________________________________________________________________
____________________________________________________________________________________________________________
___________________________________________________________________________________________________________
Pre-Test
This activity will help you to remember familiar terms or concepts about market
pricing and equilibrium.
Directions: Write the letter of the correct answer in the space provided before each number.
Good luck!
1. What does OFW means?

A. Overseas Foreign Workers C. Overseas Filipino Workers
B. Overall Filipino Workers D. None of the above
2. What kind of currency was established during the Commonwealth period?
A. Philippine peso C. US Dollars
B. Piloncitos D. None of the above
3. What is the use of applied economics in Philippine economy?
A. Analytically review potential outcomes
B. Apply statistical and mathematical theories
C. Increase production
D. Validate economic theories
4. How can you categorize the statement “affordable housing”?
A. Cheap housing C. Luxurious housing
B. Expensive housing D. Quality housing
5. Which of the following is NOT a cause of unemployment?
A. No job opening C. Poverty
B. No Vacancy D. Scarcity
6. What is Europe’s monetary currency?
A. Dollar C. Real
B. Euro D. Ringgit
7. Which of these statements is the MOST root cause of unemployment?
A. No job opening C. Underemployment
B. Poverty D. None of the above
8. What could be the initial action of consumers if prices of basic commodities increase in
the market?
A. Consumers will look for expensive products
B. Consumers will resort to grocery items
C. Consumers will buy luxurious items
D. Consumers will look for substitute goods
9. Which of the following statement is NOT TRUE about peso depreciation?
A. Domestic tourists find it expensive to visit places abroad because they will need
more pesos to buy dollars.
B. Exporters and overseas Filipino workers and their dependents now receive more
pesos for every dollar they exchange.
C. Higher prices in peso terms for imported goods and services.
D. It fuels inflation due to increase in the price of imported goods.
10. What could be the reason in the slowdown in remittances as stated by the World Bank?
A. A weak peso will negate the impact of crude oil prices abroad.
B. Political uncertainties in host countries.
C. Slowdown in the advanced economies.
D. Stricter implementation of the migrant workers bill of rights.
11. Which of the following market types has the fewest number of firms?
A. Monopolistic competition C. Oligopoly
B. Monopoly D. Perfect competition
12. What is the difference between perfect competition and monopolistic competition?
A. In perfect competition, firms produce identical products, while in monopolistic
competition does not.
B. Perfect competition has a large number of small firms while monopolistic
C. Perfect competition has barriers to entry while monopolistic competition dos not.
D. Perfect competition has no barriers to entry while monopolistic competition does
not.
13. Why is there a need for the Philippine government to identify the need to promote
entrepreneurial spirit to the younger generation?
A. Large numbers of Filipino seek to find a better opportunity abroad.
B. To have adequate access to innovation of technology and proper management
in entrepreneurship that could make our political and economic condition
stable.
C. To establish a longer hour of work in the business sector.
D. To promote political will.
14. Which of the following is the best example of a perfectly competitive market?
A. Athletic shoes C. Farming
B. Diamonds D. Soft drinks
15. Why is perfect competitive firms are considered as price takers?
A. Each firm is very large
B. Many other firms produce identical products.
C. Their Demand curves are downward sloping.
D. There are no good substitutes for their products.
Lesson 4
Pertaining to Prices of Basic Commodities
Rice remains the most important food item in the daily meals of Filipinos. It comprises the
bulk of their total volume of consumption and amount of expenditures for the 15 most consumed
agricultural food in the Philippines.
However, the sensitivity of quantity demanded for rice to the change of price of rice is not
only explained solely by the change in its price itself (substitution effect) but also by the change
in the real income (income effect) of consumers.
Among the other selected commodities, the estimated cross-price elasticities indicate that
corn, sweet potato, and cassava are the most substitutable. On the other hand, potato, taro, milkfish,
tilapia, pork, chicken, banana, mango, pineapple, eggplant, and bitter gourd are all considered rice
compliments.
If ever prices of basic commodities in the market increases, naturally, the tendency of the
consumers is to look for substitute products which are lesser in price. For example, if price of meat
increases in the market, the consumers will look for a cheaper price substitute. Meat can be
substituted by fish or chicken or vegetables. Always, the consumers tend to look for cheaper price
substitute of commodities in the market.
How it Works?
If the quantity demanded changes a lot when prices change a little, a product is said to be
elastic. This often is the case for products or services for which there are many alternatives, or for
which consumers are relatively price sensitive. For example, if the price of Chocolate A doubles,
the quantity demanded for Chocolate B will fall when consumers switch to less-expensive
Chocolate B.
When there is a small change in demand when prices change a lot, the product is said to be
inelastic. The most famous example of relatively inelastic demand is that for gasoline.
Something to remember!
1. Elasticity is important because it describes the fundamental relationship between the price
of a good and the demand for that good.
2. Elastic goods and services generally have plenty of substitutes.
3. Inelastic goods have fewer substitutes and price change does not affect quantity demanded.
✓ Example of elastic goods and services include furniture, motor vehicles, instrument
engineering products, professional service, and transportation services.
✓ Example of inelastic goods include gas, electricity, water, drinks, clothing, food,
and oil.
What is Price Elasticity?
Price elasticity of demand is the measure of responsiveness of the quantity demanded of a
good caused by a change in its price.
Importance of price elasticity of demand
It is very important for government and private suppliers to take into consideration price
elasticity of demand for economic decision-making.
1. The government uses the price elasticity of demand for the following reasons.
- Sales taxes increase the price of goods. In order to increase tax revenue the government imposes
this tax on elastic goods. For example, rice and tinned fish.
- Tariffs such as import duties and taxes increase the prices of goods. The government may impose
tariffs on inelastic goods to increase tax revenue. For instance, imported goods like cars. -
Devaluation of currency to promote export and discourage imports. In such situations government
need to know the elasticity of demand for exports and imports.
- Subsidies for producers to reduce the cost of production and provide some relief to consumers.
If subsides are to benefit consumers government should subsidize inelastic goods. For example,
agriculture produces like coconut and coffee.
2. When suppliers need to revise their product prices demand elasticity is an import consideration.
If a supplier wants to increase price and revenue, the decision is easier with inelastic goods and
more difficult with elastic goods.
- By increasing the price of an inelastic good, a supplier can increase total revenue.
- By decreasing the price of an elastic good, a supplier can increase total revenue.
- By changing the price of a good with unitary elasticity, a supplier cannot change total revenue.
Other concepts of Elasticity

1. Elasticity- it is a measure used in response to changes in the determinants of demand and
supply.
2. Price elasticity- a measure used in determining the percentage change in quantity against
the percentage change in price.
3. Income elasticity- the percentage change in quantity of one good compared to the
percentage change in the price of related goods.
4. Cross elasticity- percentage change in quantity of one good compared to the percentage
change in the price of related goods.
To derive the price elasticity of demand, we use the formula:
ep= Percentage change in quantity demanded
Percentage change in price
Therefore: Q2-Q1
ep= Q1
P2-P1
P1
Example:
Price Quantity Demanded
4 100
5 60
Let: Q1= 100 P1= 4

Q2= 60 P2= 5
Solution: ep= 60-100

100
5-4
4 = -0.4
0.25
= -40 = -1.6
100
1
4
* The mathematical presentation of price elasticity of demand has a negative sign due to the inverse
relationship of price and quantity demanded.
Types of Elasticity
You have already learnt about how to calculate demand elasticity. You will now learn about
the different types of price elasticity of demand. There are five types of price elasticities.
Depending on the coefficient, price elasticity of demand is classified as follows:
Coefficient Types of Elasticity

Less than 1 (E ˂ 1) Elastic
Equal to 1 (E= 1) Inelastic
Greater than 1 (E ˃ 1) Unitary
∞ (infinite) Perfectly Elastic
0 Perfectly Inelastic
What is Price Elasticity of Supply?
The elasticity of supply is also the response of quantity offered for sale every change in
price. Like, the consumers, the suppliers also respond to price changes.
Formula:
Percentage change in quantity supplied
es=
Percentage change in price
es= Qs2-Qs1
Qs1
P2-P1
P1
Example: Given the following supply schedule of commodity X:

Price Quality Supplied
P12.00 38
P21.00 56
Let Qs2= 56 P2= P21.00
Qs1= 38 P1= P12.00
Therefore: 56-38
= 38
21-12
12
= 18
38 = 0.47
9 0.75
12 = .62
Equilibrium Price is the price at which the quantity demanded equals the quantity
supplied.
Calculating Excess Supply: At the market price of sugar, there is excess supply of 400 units.
Example:
400 units
Quantity Supplied – Quantity Demanded =600 units – 200 units = excess
Calculating Excess Demand: At the market price of sugar, there is excess demand of 200 units.
Example:
Quantity Demanded- Quantity Supplied =500 units - 300 units = 200 units
excess
Enrichment Activity!
Directions: Apply what you have learned from this module on how to solve the following
situations. Use the RUBRICS as your guide in accomplishing your output.
1. What is the difference of unemployment and underemployment? Support your answer.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
2. Why is that OFWs are considered modern heroes of our time? Briefly support your
answer.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Scoring Rubrics
Criteria 5 4 3 2 1
Understanding Identified all Identified Identified Identified Does not
problems and almost several few problems demonstrate
solutions with problems and problems and and solutions understanding
a thorough solutions for solutions but but lack in the
understanding better lack elaboration LEARNED
under understanding elaboration on the section
LEARNED under on the LEARNED
section LEARNED LEARNED section
section section
Organization Presented an Very clear Clearly and Somewhat Unorganized
outstanding and logically logically clear and
organization organized organized organized
of ideas
Post- Test
Directions: Choose the letter of your answer . Write your answer on the space provided.
1. What could be the initial action of consumers if prices of basic commodities increase in
the market?
A. Consumers will look for expensive products
B. Consumers will resort to grocery items
C. Consumers will buy luxurious items
D. Consumers will look for substitute goods
2. Which of the following statement is NOT TRUE about peso depreciation?
A. Domestic tourists find it expensive to visit places abroad because they will
need more pesos to buy dollars.
B. Exporters and overseas Filipino workers and their dependents now receive
more pesos for every dollar they exchange.
C. Higher prices in peso terms for imported goods and services.
D. It fuels inflation due to increase in the price of imported goods.
3. In economics, the study of the importance of the availability of basic needs of the
consumers is vital. This is provided in the management of the producer. What do you call
the quantity of products that a producer is willing to sell to the consumers?
A. Demand C. Production
B. Equilibrium D. Supply
4. What is Europe’s monetary currency?
A. Dollar C. Real
B. Euro D. Ringgit
5. Which of these statements is the MOST root cause of unemployment?
A. No job opening C. Underemployment
B. Poverty D. None of the above
6. What does OFW means?
A. Overseas Foreign Workers C. Overseas Filipino Workers
B. Overall Filipino Workers D. None of the above
7. What kind of currency was established during the Commonwealth period?
A. Philippine peso C. US Dollars
B. Piloncitos D. None of the above
8. What is the use of applied economics in Philippine economy?
A. Analytically review potential outcomes
B. Apply statistical and mathematical theories
C. Increase production
D. Validate economic theories
9. How can you categorize the statement “affordable housing”?
A. Cheap housing C. Luxurious housing
B. Expensive housing D. Quality housing
10. Which of the following is NOT a cause of unemployment?
A. No job opening C. Poverty
B. No Vacancy D. Scarcity
11. Why is there a need for the Philippine government to identify the need to promote
entrepreneurial spirit to the younger generation?
A. Large numbers of Filipino seek to find a better opportunity abroad.
B. To have adequate access to innovation of technology and proper management in
entrepreneurship could make our political and economic condition stable.
C. To establish a longer hour of work in the business sector.
D. To promote political will.
14. There are no good substitutes for their products. Which of the following market types has
the fewest number of firms?
A. In perfect competition , firms produce identical products, while in monopolistic
B. Perfect competition has a large number of small firms while monopolistic
C. Perfect competition has barriers to entry while monopolistic competition dos
not.
D. Perfect competition has no barriers to entry while monopolistic competition
does not.
Key Answer:
Pre-Test
1. C
2. B
3. B
4. A
5. D
6. B
7. B
8. D
9. C
10. D
11. A
12. A
13. B
14. D
15. B
Answer may vary
Post-Test
1. D
2. C
3. D
4. B
5. B
6. C
7. B
8. B
9. A
10. D
11. B
12. D
13. B
14. A
15. A
References:
961905-4
2016
Senior High School
12
APPLIED ECONOMICS
MELC: Differentiate Various Market Pricing on Economic Decision
ABM_AE12-Ie-h-7
MODULE 5
Objective:
1. Differentiate market structures in terms of:
a. Number of sellers
b. Types of products
c. Entry/exit to market
d. Pricing power
Prepared by:
VENUS A. VIADO
SHS- TII
Pre-Test
This will help you to differentiate various market structures, do not be afraid about
the result of this test, what is important is for you to do your best.
Directions: Multiple Choice: Choose the letter of the correct answer. Write your answer in
the space provided for each item.
1. What is the ideal market structure?

2. Which of the following market types has the fewest number of firms?
A. In perfect competition , firms produce identical products, while in monopolistic
B. Perfect competition has a large number of small firms while monopolistic competition
does not.
C. Perfect competition has barriers to entry while monopolistic competition dos not.
D. Perfect competition has no barriers to entry while monopolistic competition does not.
D. There are no good substitutes for their products.
6. Why do firms use marketing?
A. Convince customers that their products are worth the price.
B. Influence a consumer’s buying decision.
C. Persuade buyers that their products is superior than others.
D. All of these.
7. What consist of differentiated products?
A. Close but not perfect substitutes
B. Many perfect substitutes
C. No close substitutes
D. No substitutes of any kind
8. In monopolistic competition, each firm supplies a small part of the market. This occurs
because __________________.
A. firms produce differentiated products.
B. there are a large number of firms.
C. there are no barriers to entry
D. there are barriers to entry
9. Which of the following statements is correct?

A. The market demand and the firm's demand are the same for a monopoly.
B. Monopolies have perfectly inelastic demand for the product sold.
C. Monopolies are guaranteed to earn an economic profit.
D. All of the above are correct.
10. Which describes a barrier to entry?
A. Anything that protects a firm from the arrival of new competitors.

B. A government regulation that bars a monopoly from earning an economic profit
C. Something that establishes a barrier to expanding output.
D. Firms already in the market incurring economic losses so that no new firm wants
to enter the market
Lesson 5
Perfect Market and Its Features
Firstly, let’s define what market is.
What is a Market?
Market refers to any place or process involved with the exchange of goods and services.
There are 4 basic types of market by traditional economic analysis and they are:
1. Perfect competition
2. Monopolistic competition
3. Oligopoly
4. Monopoly
What is a Perfect Competition?
Perfect competition is characterized by many buyers and sellers, many products that are similar
in nature and, as a result, many substitutes.
Main Characteristics of Perfect Competition
1. There is perfect knowledge, with no information failure or time lags in the flow of
information.
2. Given that producers and consumers have perfect knowledge, it is assumed that they
make rational decisions to maximize their self-interest.
3. There are no barriers to entry in or exit out of the market.
4. Firms produce homogeneous, identical, units of output that are not branded.
5. Each unit of input, like labor, are also homogeneous.
6. No single firm can influence the market price, or market conditions.
7. There are very many firms in the market which are too many to measure. As a result
of no barriers to entry.
8. There is no need for government regulation except to make markets more competitive.
9. There are assumed to be no externalities.
10. Firms can only make normal profits in the long run, although they can make abnormal
(super normal) profits in the short run.
Equilibrium in perfect competition is the point where market demands will be equal market
supply. A firm's price will be determined at this point. In the short run, equilibrium will be affected
by demand. In the long run, both demand and supply of a product will affect the equilibrium in
perfect competition. A firm will receive only normal profit in the long run at the equilibrium point.
(Debreu, 1972).
What is a Monopolistic Competition?
Monopolistic competition occurs when a large number of firms price and sell differentiated
products that are close substitutes to each other.
Features of Monopolistic Competition
The following are features of monopolistic competition.
1. Many firms: There is relatively large number of firms in the market. Such firms produce
close substitutes and compete with each other. Stiff competition exists between firms and
they share market demand.
2. Product differentiation: the products produced are not identical. They are slightly
different from each other. Despite this, they remain close substitutes, therefore, their prices
are similar.
3. Freedom of entry and exit: As in perfect competition, businesses have freedom to enter
and exit an industry. When existing firms make super profits, the new firms enter the
industry to produce close substitutes and exit once these super profits are no longer
available. Because of this firms in the market earn normal profits in the long run.
4. Non-price competition: Business use means other than price to complete. This is a
common feature in monopolistic competition, so companies spend a large amount of
money
What is Oligopoly?
An oligopoly is a market dominated by a few large firms. It falls between a monopoly and
monopolistic competition. In this market, a small number of firms account for a large proportion
of output and employment. Firms within the oligopoly produce branded yy and each seller
competes with the others. The actions of one firm can influence the actions of its competitors. This
is called rivalry. Advertising and marketing are important features of competition. A high degree
of dependence exists among the businesses in their decision making: firms in the market react to
the behavior of their competitors. They compete for market share using price and non-price
competition. Price competition involves discounts. Non-price competition includes special
services to customers such as loyalty cards, home deliveries, extensions of opening hours, special
offers and entertainment facilities in shopping outlets. High entry barriers exist because existing
firms have achieved economies of scale.
Features of Oligopoly Market
1. A relatively small number of firms in the industry that dominate the market.
2. Differentiated products
3. Mutual interdependence of businesses
4. Relatively high barriers to entry due to economies of scale
5. Businesses in the market earn super profits in the long run
Examples of oligopolies include: - Nike and Reebok- sports shoe products
- Coca Cola and Pepsi – soft drinks
What is Monopoly?
In a monopoly market a single producer or seller of a product that has no close substitutes
controls the market. This is the least competitive situation, so it is very hard for a true monopoly
to exist. A monopolist has no competitors.
Features of Monopoly
The following are the features of a monopoly market.
1. Strong barriers to entry. It is usually very difficult to keep others out of a market which
is capable of earing super profit, such as a monopoly. Government intervention may be needed in
the form of legal barriers. Other legal barriers may be formed by the use patents. Financial barriers,
due to a very high capital set-up cost, may also exist, giving rise to a natural monopoly.
2. Imperfect knowledge
3. No advertising. There is no need to defer customers away from a competitor, as there is

no close substitute good or service.
4. One seller
5. The sole seller offers a product for which there is no close substitute.
6. Strong control over price or quantity.

Practice Test
Directions: Read the article that show changes in supply or demand then analyze the articles’
summaries and translate the content to the analysis of demand, supply, quantity demanded
and quantity supplied, and market equilibrium.
1. DVD sales are sliding because more consumers are watching content digitally. (This
involves two markets.)
Article: https://www.bloomberg.com/news/articles/2015-01-06/u-s-dvd-sales-continue-to-
slide-as-digital-viewing-soars
Market What Demand Supply Curve Equilibrium

changed? Shift Price and
Quantity
DVD Number of
buyers
(decrease)
Number of
buyers
Digital
(increase)
Content
2. Consumers become more health conscious and reduce their consumption of donuts.
Article: : newsmax.com/health/Health-News/sugary-processed-
foodspastries/2014/12/29/id/615359/
Market What Demand Supply Curve Shift Equilibrium

changed? Price and
Quantity
Donuts Number of
buyers
Reference: https://www.frbatlanta.org/-/media/documents/education/publications/extra-
credit/2015/fall/lessons-and-activities/high-school/microeconomics/supply-and-demand-
activity/extra-credit_supply-and-demand-infographic_activity.pdf
Practice Test
You are now ready to share what you have learned. Do not be afraid to
voice out your idea’s future entrepreneurs.
Directions: Give your ideas on the following concepts.
1. What is a market?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. What is the difference between monopolistic competition and perfect competition? Support your
answer.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________________________________________________________________
POST TEST
Now that you are already equipped with the ideas regarding market
structures, this activity will be easy for you to fill up. Good luck…
Direction: Fill in the table with the correct information.
Types of Market Features Advantages Disadvantages

Answer Key:
Jumbled Letters
1. Commodities
2. Income effect
3. Price
4. Elasticity
Pre-test answer:
1. D
2. C
3. A
4. D
5. A
6. D
7. B
8. B
9. A
10. A
Guide question:
Essay type: Learners answer varies
1. DVD sales are sliding because more consumers are watching content digitally. (This
involves two markets.)

changed? Price and
Quantity
DVD Number of Decreased No change Demand to Equilibrium
buyers left price and
(decrease) quantity fall
Number of Increased No change Demand to Equilibrium

buyers right price and
Digital
(increase) quantity rise
Content
1. Consumers become more health conscious and reduce their consumption of donuts
changed? Price and
Quantity
Donuts Number of Decreased No change Demand to Both
buyers left decrease
Answer Key:
Answer the following questions:
1. What is a market?
answer: Market is a place where sellers and buyers interact with one another.
2. What is the difference between monopolistic competition and perfect competition? Support
your
answer. In a monopolistic competition condition of entry or exit is easy, type of product
is similar but not identical with a limited amount of control over product price. On the other
hand, perfect competition there is freedom in condition of entry or exit, types of products
are homogeneous or identical and price takers.
Fill in the table with the correct information.
Types of Market Features Advantages Disadvantages

✓ Prices are set by ✓ freedom of entry ✓ Sellers must
Perfect market the market and exit sell their
forces of ✓ perfect products at set
demand and knowledge of prices, no more
supply buyers and or no less.
✓ Large number of sellers on
sellers who are market prices
price takers and conditions.
✓ No barrier to
entry or exist in
this market type
✓ Sellers sell their
products at
given set price
✓ Perfect
knowledge in
the market place
✓ Large number of
buyers none of
whom can
influence prices
✓ All sellers sell
identical
products
✓ Many firms ✓ Non-price ✓ If firms raise its
Monopolistic ✓ Product competition products, it will
competition differentiation ✓ Slightly lose some to its
✓ Freedom of differentiated rivals.
entry and exist products ✓ Firms tend to
of entry ✓ if price is spend a lot
lowered, it is more money on
able to pick up advertisement
sales from its and packaging.
rivals
Monopoly ✓ Strong barriers ✓ Firms with large ✓ Fewer
to entry markets are able consumers tend
✓ -Imperfect to earn to be satisfied
knowledge considerable with monopoly
✓ No advertising excess profit. than with
✓ One seller ✓ Can sometimes competition
✓ No close benefit ✓ -too few
substitute consumers. resources are
✓ Strong control utilized
over price and ✓ Market is
quantity difficult to
enter
✓ A relatively ✓ Has more ✓ Firms try to
Oligopoly small number of control over that predict the
firms in the dominate price. reactions of
industry ✓ -Consumers their
✓ Differentiate gain when there competitors
products is price wars ✓ When
✓ Mutual between firms. oligopoly firms
interdependence reduce their
of business prices this will
✓ High barriers to greatly affect
entry due to the sales of
economies of their rival
scale business.
✓ Businesses in ✓ Entry of new
the market earn firms in to the
supper profits in industry would
the long run force profit
down.
✓ Oligopoly
avoids price
comparison
References:
961905-4
2016
Senior High School
12
APPLIED ECONOMICS
MELC: Analyze the Effects of Contemporary Economic Issues
Affecting the Filipino Entrepreneurs.
ABM_AE12-Ie-h-8
MODULE 6
Objectives:
1. Identify the different challenges faced by the Filipino Entrepreneurs.
2. Give possible solutions to solve the problems encountered by the Filipino

Entrepreneurs.
Prepared by:
VENUS A. VIADO
SHS- TII
Pre-Test
Name: ______________________________________________________
Directions: Choose the letter of the correct answer and write it on the space provided before
each number.
1. An entrepreneur is one who creates a new business in the face of risk and uncertainty,
for the purpose of achieving profit and growth by identifying opportunities and
assembles the necessary resources to capitalize on those opportunities.
a. True
b. False
2. Which of the following is not a characteristic of the typical entrepreneur?
a. confidence, in their ability to succeed
b. value of money over achievement
c. desire for immediate feedback
d. a future orientation
3. The primary cause of small business failures is,_____________.
a. lack of capital
b. management incompetence
c. poor location
d. improper inventory control
4. The business plan has two essential functions: it helps the entrepreneur determine if the
business will succeed, and it helps recruit management talent to run the new company.
a. True
b. False
5. The wise entrepreneur will hire a professional to prepare his business plan for him.
a. True
b. False
6. The purchase of goods that are not consumed today but are used in the future to create
wealth is called _______________.
a. capital c. stock
b. investment d. tax
7. The primary purpose of a business plan is to
a. Attract lenders and investors.
b. Enable an entrepreneur to take his or her company public.
c. Guide a company by plotting a strategy for its success.
d. Meet legal requirements designed to protect lenders and
investors.
8. Business entrepreneurs hire people who have this kind of outlook:
a. Honest c. Right attitude and disposition in life
b. Punctual d. Jack of all trades
9. Changes in national income creates_________.

a. accelerator effect c. clutch effect
b. breakdown effect d. domino effect
10. One of the results of unemployment is _____________.
a. drug dealing c. no job
b. rise of criminality d. all of the above
11. All are current problems of Filipino entrepreneurs except.
a. Income effect c. Financing capital
b. Inadequate access to technology d. Marketing advise
12. What is the other term for manpower?
a. Horse power c. Power house
b. Laborer d. System power
13. What is the meaning of LGU?
a. Lead Government Unit c. Local Government Unit
b. Leadership Goal Unit d. Local Governors Unit
14. What do you call the backbone of our economy?
a. Cooperative c. Midterm Development
b. Entrepreneurs d. Sustainable Development
15. Household and corporate savings provides a flow of funds into ___________.
a. financial sector c. household sector
b. government sector d. local sector
Lesson 6
Contemporary Economic Issues Facing the Filipino Entrepreneur
Entrepreneurship
➢ Refers to the ability that some people possess for managing the resources of land, labor,
and capital to produce goods, seek new business opportunities, and build on new ways of
doing things.
➢ It is a way of providing individuals access to have better way of living for their family’s
wellbeing.
Note: We are experiencing a very difficult problem concerning our Philippine economy and having
this opportunity to train the skills and produce a competitive young industrialist can sustain
solutions by creating wealth and job prospects and community empowerment.
What is Entrepreneur?
Entrepreneur is an individual who can organize his own business. He adopts possible risks
and return of his investment. He determines on what, how, and how much good or service will be
generated. He is also in charge of monitoring ang renovating all activities in his enterprise.
Economic Issues Confronting Filipino Entrepreneur
1. Investment and interest rate- entrepreneurs especially those who are new to industry have
difficulty in obtaining loan from private banks they need a collateral and at the same time
pay high rate of interest.
2. Rentals- entrepreneurs doing business need to pay higher rental rates with other monthly
fees include water and electrical deposit, renovation fees and even advertisement.
3. Minimum wage- entrepreneurs are obliged to implement the wage order to all minimum
wage workers along with their other benefits.
4. Taxes- it is the obligation of entrepreneurs to pay these following taxes set by the
government.
1. Percentage tax- this is imposed to small scale businesses having
gross annual sales that do not exceed Php 1, 919, 500, and not
VAT registered.
2. Value added tax- is a method of sales tax.it is an indirect tax
which may be passed on the buyer, lessee of goods, properties
or services.
3. Income tax- it is a government levy tax imposed to individuals
or entities that varies with the income or profits of the taxpayers.
What is Investment?
1. Investment is the purchase of goods that are not consumed today but are used in the future
to create wealth.
2. In finance, it is monetary asset purchased with the idea that the asset purchased with the
idea that the asset will provide income in the future or appreciate and be sold at a higher
price.
Why do firms Invest?
✓ Investment may be required to replace worn out, or failing machinery, equipment, or

buildings. This is referred to as capital consumption and arises from the continuous
depreciation of fixed capital assets.
✓ Investment may be undertaken to purchase new machinery, equipment, or buildings in
order to increase productive capacity.
Gross investment includes both types of investment spending, but net investment only measures
new assets rather than replacement assets.
Net investment= Gross investment- Depreciation
For Example A bus company needs to replace 7 worn buses with 2 new buses to have a better
service. Following the equation above:
Gross investment= 7+2
=9
Depreciation or replacement investment= 7
Net investment= Gross investment- Depreciation
= 9-7
Net investment =2
Note: In economic theory, net investment carries more significance, as a basis for economic
growth.
The Main Determinants of Investment
1. The expected return on the investment- this means that businesses or entrepreneurs will
require a return on their investment in order to earn a reward.
2. Business confidence- confidence can have a considerable influence on investment
decisions.
3. Changes in national income- in economic theory tells that in macro-economic level,
minor changes in national income can trigger much larger changes in investment
levels.
4. Interest rates- the cost of borrowing and the reward of lending.
5. General expectations- general expectations about the future will influence a firm’s
investment appraisal and eventual decision-making.
6. Corporation tax- firms pay corporation tax based on their profits.
7. The level of savings- increased saving may reduce interest rates and stimulate
corporate borrowing and investment.
At present, Filipino entrepreneurs are faced with the following challenges:
➢ Government licensing and permits

➢ Prohibitive rental rates and other clauses in malls
➢ There are many who have no jobs
Current Problems of Filipino Entrepreneurs
1. Inadequate access to technology

2. Financing capital
3. Marketing advice
4. Logistical problems in setting up and maintaining competitiveness in the market.
Work that Imagination!
Name: ______________________________________________________
Directions: Identify some problems of the Filipino entrepreneurs nowadays and recommend
some solutions to it.
________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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______________________________________________________________________________
______________________________________________________________________________
Scoring Rubrics
Criteria 5 4 3 2 1
problems and almost several few problems demonstrate
solutions with problems and problems and and solutions understanding
a thorough solutions for solutions but but lack in the
understanding better lack elaboration LEARNED
under understanding elaboration on the section
LEARNED under on the LEARNED
section LEARNED LEARNED section
section section
of ideas
Direction: Answer the following questions briefly.
1. What is an investment?
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
2. Define interest rate?

__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
SELF-REFLECTION. Reflect on your personal experiences during the Luzon wide

lockdown because of Covid-19 pandemic and answer the following questions.
1. As a student, how do you handle the effects of covid-19 pandemic? Cite briefly.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Scoring Rubrics
Criteria 5 4 3 2 1
Reflective Exceeds Meet Reflection Reflection Does not
analysis and explains and explains explain the is vague learning
thoroughly roughly the experience experience
experience with rough is vague
analysis
of ideas
Post- Test
Identify the different challenges faced by Filipino Entrepreneurs.
Multiple Choice. Choose the letter of the correct answer and write it on the space provided
before each number.
1. What is an entrepreneur?
A. Someone who invests time and money to start a business.
B. Someone who makes a lot of money.
C. Someone who takes a risk to make a profit.
D. Both A & C.
2. Define Free Enterprise:
A. A business taking a risk to make a profit.
B. A program administered by the Government.
C. People in business trying to make a profit.
D. A business adventure or undertaking.
3. Capital is:
A. Money available to invest.
B. Prohibitive cost of entry.
C. A guarantee that a company will be successful.
D. A & B.
4. The following are included in a business plan
A. Financial information, production plans, personnel policies.
B. Goals of the business and how they will be achieved.
C. A step by step plan for the success of your business.
5. Quality Control is defined as:
A. How many & what types of people are shopping at a store.
B. Tells you what the customer will buy
C. Tells you how much the customer will pay for the product.
6. A market survey is important because it tells you:
A. How business ensure that a manufactured products meet defined quality
standards.
B. Tells you what the customer will buy.
C. Tells you how much the customer will pay for the product.
7. One of the main reasons why owners develop a business plan before starting a
new business is to ______________.
A. organize production processes.
B. estimate financial needs.
C. identify qualified workers.
D. prepare operating manuals
8. What is the importance of a marketing plan in a business?
A. Analyze the firm's competitive advantages and build a marketing Strategy
around them.
B. Create a marketing mix that meets customer needs and wants.
C. Determine customer needs and wants through market research.
9. The first step in the market research process is to__________________.
A. collect data.
B. define the problem.
C. design the research,
D. determine the relevant information.
10. Which of the following is part of an organization’s marketing environment?
A. Any internal or external force that affects the organization’s ability to crate,
communicate, deliver and exchange offerings of value.
B. Organization’s micro-environment.
C. The organization’s macro- environment.
D. All of the options listed are part of an organization’s marketing environment.
11. The following statements are correct concerning the effects of peso depreciation,
which is NOT included?
a. Domestic tourists find it expensive to visit places abroad.
b. Foreign tourists find it attractive to visit Philippines.
c. Higher debt servicing on the part of the government.
d. It fuels inflation due to increase in the price of imported goods.
12. . Why do lending institutions carefully evaluate how well a business meets certain
criteria before making a loan?
A. To improve relations C. To provide service
B. To prevent theft D. To reduce risk
13. At present time, Filipino entrepreneurs are faced with the following challenges. Which
among the items listed is NOT included?
A. Entrepreneurs complain on how difficult to apply or renew business permits
with certain local government units.
B. Entrepreneurs feeling a bigger intensity with rental rates and other incidental
charges implemented in malls.
C. There are many who have no jobs.
D. The Philippines is an entrepreneurial country.
14. The level of investment in an economy tends to vary by a greater extent than other
components of aggregate demand. Which of the following groups are considered
determinants of investment?
A. Expected Return on the Investment, Business Confidence, General
Expectations, Interest Rates
B. Interest, Rates, Capital, Population,
C. Net investment, Gross investment, Depreciation, Income
D. Wage, Rates, Investment, Income
15. Why do firms invest into the circular flow of income?
A. Investment in economy tends to vary on a greater extent.
B. Investment may be required to replace worn out, failing machinery, equipment
and/or buildings.
C. Investment is needed for the decrease in production.
D. Investment may be undertaken to purchase new machinery, equipment to
increase productive capacity.
Answer Key: Pre-Test
1. a
2. b
3. a
4. a
5. b
6. b
7. c
8. c
9. d
10. d
11. a
12. b
13. c
14. b
15. b
Essay:
Financing capital
Inadequate access to technology
Logistical problems in setting up and maintaining competitiveness
Marketing advises
Criteria 5 4 3 2 1
problems and several few problems demonstrate
almost
solutions problems and problems and and solutions understandin
with a solutions for solutions but but lack g in the
thorough lack elaboration LEARNED
better
understandin understandin elaboration on the section
g under g under on the LEARNED
LEARNED LEARNED section
LEARNED
section section
section
of ideas
Directions: Answer the following question briefly.
1. What is an investment?
Investment is an asset or item that is purchase with the hope that it will
generate income or appreciate in the future to create wealth.
2. Define interest rate?

It is the percentage charged by a lender to a borrower for any debt given
generally expressed as a percentage of the principal money.
Self-Reflection:
Criteria 5 4 3 2 1
Reflective Exceeds Meet Reflection Reflection Does not
analysis and explains and explains explain the is vague learning
thoroughly roughly the experience experience
experience with rough is vague
analysis
of ideas
Post- Test
1. D
2. A
3. D
4. D
5. A
6. D
7. A
8. A
9. B
10. D
11. B
12. D
13. D
14. A
15. B
References:
961905-4
2016
Learner’s Checklist
Use this checklist to monitor your progress when preparing for the exam. Put a check (/) in
the column which you think you have learned the lesson or not.
Topic Aspects of the I do not I

curriculum Covered in understand understand
Study guide
Lesson 1
Reevaluating Economics as
Social Science
Lesson 2
Economics as an Applied
Science
Lesson 3
Demand and Supply
Lesson 4
Pertaining to Prices of Basic
Commodities
Lesson 5
Perfect Market and Its
Features
Lesson 6
Contemporary Economic
Issues Facing the Filipino
Entrepreneur
Your welfare is always at the top priority and this module is one way of giving you the
opportunity to continue learning even if you are at home. Your cooperation, honesty and discipline
are highly appreciated. Happy Learning!
Congratulations you have finished the module!

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Applied Economics

VENUS AQUINO- VIADO

What I Have Learned: This includes questions or blank sentence/paragraph to be filled in

Post-Test: This is a task which aims to evaluate your level of mastery in

Answer Key This contains answers to all activities in the module.

At the end of this module you will find:

Reference This is a list of all sources used in developing this module.

This module is the beginning of more learnings about Applied Economics.

“Aim High and Hit the Sky”v.v.

MELC: Differentiate economics as a social science and applied social

1. Define some basic terms in applied economics.

1. Entrepreneurs do all of the following, EXCEPT:

Revisiting Economics as Social Science

In economics, a need is something needed to survive while a want is something that

Let us be familiarized with the importance of Economics in our life:

1. It guides us how to make a living.

The Nature of Economics:

Economics is a Science. A science is a body of systematic knowledge built upon by

1. There is factual information using statistics.

Two Branches of Economics

- also known as “Price Theory”

Factors of Production or Inputs

1. Labor- termed as human resources.

1. Economics is a social science because it deals with human nature.

Cellphone Delivery vans Bill Gates Ayala Land, Inc. Computer

Capital Entrepreneur Land

Problems confronting our Does it have something to do with economics?

Establish Importance of Economics

Directions: Identify if the statement below refers to Microeconomics, Macroeconomics, or

1. Predicting how consumers will react to higher gasoline prices.

2. Calculating the rate of unemployment.

3. Analyzing the consequences of a free trade agreement between two

6. Explaining the effect of higher wages on total production.

9. Guiding a corporation about an investment proposal.

Economic Terms Explanations

a) Needs- something that is needed to survive.

1. Value of money A. Barter

2. The human effort required to produce B. Commodities

3. A situation when no suitable jobs C. Consumer

4. It is an excess of quantity demanded over D. Goods

5. Anyone who uses goods and/or services. E. Labor

6. Tangible items of value and can be seen. F. Purchasing power

7. Raw materials or primary agricultural G. Shortage

8. It is defined as having a strong desire for H. Theory

9. A set of organized principles that explain and I. Unemployment

10. The exchange of one good or service to another. J. Want

ECONOMICS AS AN APPLIED SCIENCE

“Economics is a study of economic activities of a man. It is only concerned with the

Need to know about Applied Economics:

Importance of applying economic theories:

1. Applying economics to the status of the economy of a company, a household, or a country

Basic Economic Problems:

5. Is the economy’s capacity to produce goods - This is essentially a dynamic

The three economic problems are: 1. What to produce?

1. What will happen when there is a shortage in a market?

Demand and Supply

Meaning of Demand and Supply

What is a Demand Schedule?

What is a Supply Schedule?

The Law of Demand and Supply

1. Income Effect- At lower prices, an individual has a greater purchasing power.

All about the Law of Demand

Price Quantity Supplied

The Law of Supply