Applied Economics

Quarter 3 – Module 2:
Basic Economic Problems
Applied Economics – Grade 11
Alternative Delivery Mode
Quarter 1 – Module 2: Basic Economic Problems
First Edition, 2020

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Applied Economics
Quarter 1 – Module 2:
Basic Economic Problems
Introductory Message
This Self-Learning Module (SLM) is prepared so that you, our dear learners,
can continue your studies and learn while at home. Activities, questions, directions,
exercises, and discussions are carefully stated for you to understand each lesson.

Each SLM is composed of different parts. Each part shall guide you step-by-
step as you discover and understand the lesson prepared for you.

Pre-tests are provided to measure your prior knowledge on lessons in each

SLM. This will tell you if you need to proceed on completing this module or if you
need to ask your facilitator or your teacher’s assistance for better understanding of
the lesson. At the end of each module, you need to answer the post-test to self-
check you’re learning. Answer keys are provided for each activity and test. We trust
that you will be honest in using these.

In addition to the material in the main text, Notes to the Teacher are also
provided to our facilitators and parents for strategies and reminders on how they can
best help you on your home-based learning.

Please use this module with care. Do not put unnecessary marks on any part
of this SLM. Use a separate sheet of paper in answering the exercises and tests. And
read the instructions carefully before performing each task.

If you have any questions in using this SLM or any difficulty in answering the
tasks in this module, do not hesitate to consult your teacher or facilitator.

Thank you.

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 What I Need to Know

This module is designed and written to help you understand on how Economics
formulates various laws and applied economics applies them in practice in solving
various economic problems

After this module, the learners will be able to:

1. Discuss why economics is an applied science;
2. Explain the basic economic problems; and
3. Understand how applied economics work.

What I Know

Identify the word/s being described by the following sentences. Choose your answer
from the box below. Write your answer in the space provided.

1. Something you would like to have.

2. Something you have to have.

3. The resources from nature that are used in the production

Including land, raw materials and natural process
4. The increase in price of goods and services.

5. This will help your plants grow and yield a bountiful harvest.
6. The shortage of supply available.

7. Trading off commodities or services without the aid of money.

8. Natural Resource that is found in nature and is not man-made.

9. This will help control insects from destroying your crops.

10. Filipino workers who work overseas to support family needs.

11. This can be used in cooking as substitute of LPG.

12. Basic staple needs of Filipinos in this pandemic time.

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 What’s New

Applied Economics – The use of this term is believed to have started nearly
200 years ago, in the writings of Jean-Baptiste Say (1767-1832) and John Stuart Mill
(1806-1873). This is the application of economic principles and theories to the
present economic condition.

Applying economic theories to current economic conditions can be helpful in the

following reasons:

1. It enables the true picture of the situation to show.

2. It helps determine the steps to be taken to improve the present economic
condition.
3. It helps to avoid the recurrence of a negative situation or at least minimize the
effect.

Econometrics – Application of statistical and mathematical theories to economics

to test hypothesis and forecast future trends.

An example of real-life application of econometrics would be to study the

hypothesis that as a person’s income increases, spending increases.

Scarcity – is the limited nature of resources. Resources for an individual includes

time, money and skill. For a country limited resources include natural resources,
work force or we call it also as labor force where most of them work abroad to seek
higher salary to meet financial needs. Other limited resource of a country is
technology. The lack of technology available leaves some of our most precious natural
resources useless because we cannot use them.

These resources are all limited as compared with our unlimited wants and needs.
Because of this, people and nations should choose which goods and services they
can avail and which one they should give up during this pandemic. People opted to
choose to buy basic needs necessary for survival.

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 What is It

What is the basic economic problem? Scarcity. Because of this people and
nation must choose how to use their available resources efficiently. Every
economic system is faced with the following problems:

1. What to produce? – What is the desire of the people? Goods and services to
be produced should be based on the needs of the people. However, a very
important factor like availability of resources should be considered. A good
example of this is the production of rice. Since the Philippines is known to be
an agricultural country because of its extensive rice fields.

2. How to produce? - What are the resources to be used? How much labor is
needed to produce the needed quantity? Quality should come first before
quantity. Rice planting requires a lot of labor (workers) to plant rice.

3. For whom shall goods and services be produced? – How are the goods
distributed among consumers? Goods are produced to meet the urgent needs
of the people. How much goods are produced for the basic needs and how
much goods are produced for our wants.

There are two other problems connected with resource allocation and economic
growth.

4. Are the country’s resources being utilized, or some of them are lying idle and
unemployed? – When resources are scarce it is not good to see available
resources idle. Example of this is there are a lot of people (labor) who are not
employed or they are without jobs. As a consequence, production cannot meet
its maximum level capacity.

5. Is the economy’s capacity to produce goods growing or remaining the same

overtime? – To achieve a growth in productive capacity is a universal objective.
This makes possible an improvement in the standard of living if the rate of
population growth is not very high.

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 What’s More

On the pictures below indicate whether the goods and services fall under the category
of essential and non-essential goods and services. In your answer sheet, write E if it
falls under essential and NE if it falls under non-essential.

1. 2.

3. 4.

5. 6.

5
7. 8.

9. 10.

11. 12.

6
13. 14.

15.

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 What I Have Learned

Scarcity is the root cause of all economic problems. Because of this, individuals and
nations should:

1. Decide on how they use their available resources.

2. They should also produce goods and services based on their needs
3. Use your resources to produce essential goods necessary for survival
especially in this pandemic time.
4. Learn to appreciate your resources and use it to benefit mankind.
5.

Assessment

Identify the word/s being described by the following sentences. Choose your answer
from the box below. Write your answer in the space provided.

1. This is the application of economic theories and principles to real

world situations with the desired aim of predicting potential outcomes.

2. Came from nature that are used in production including land, raw
materials and natural processes.

3. Once the goods are produced, how they shall be distributed?

4. Goods and services to be produced are based on the needs of the

consumers.

6. This has something to do with the combination of resources to be used.

7. Is the application of statistical and mathematical theories to economics

for the purpose of testing hypotheses and forecasting future trends.

8. One of the medical products being produced in bulk quantities to

prevent the spread of the novel corona virus disease covid-19.

9. An economic problem resulted due to the pandemic caused by Covid-19.

10. Grocery stores are running out of goods to sell during the advent of
Enhance Community Quarantine due to

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 Applied Economics Econometrics
Face Mask Finite Resources
For Whom to Produce How to Produce
Natural Resources Opportunity Cost
What to Produce Unemployment
Panic Buying

Test II – 11-15 – List down 5 important products we need to have in order to prevent
the spread of diseases especially Covid-19.

Additional Activities

From your own point of view, list down 15 items of other goods and services that are
necessary to have under the “new normal” situation.

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 Answer Key

learner
answer of the
answer of the learner -depends on the
-depends on the
What’s
What’s More:
In:

Child Labor 8.

Coal 15. Pollution 7. 15. Water

14. PWD
ID 13. 4Ps 14. Soap
Commodities
13. Hand sanitizer
12. Rice
High Price of 12. Facemask
11. Firewood 6.
11. Alcohol
10. OFW
Low 5. 10. Panic
Inse cticide 9. Salary 9.buying
Unemployment
Land 8.
Population 8. Facemask
System
7. Econometrics
Barter 7. Over 4. 6. How to produce
Scarcity 6.
5. Finite resources
Fertilizer 5. nt 4. What to produce
Inflation 4.
produce
resources Unemployme 3. 3. For whom to
natural 3. 2. Natural Resources
needs 2. Corruption 2.
1. Applied Economics
wants 1.
Poverty 1. Assessmen
t
What I Know:
What I Can Do:

answer of the learner

- depends on
the
Additional
Activities:

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References
LEAÑ O JR., ROMAN D. APPLIED ECONOMICS FOR SENIOR HIGH SCHOOL.
MINDSHAPERS CO., INC., n.d.

Pettinger, Tejvan. "Basic Economic Problem - Economics Help". Economics Help,

2020. https://www.economicshelp.org/blog/glossary/basic-economic-problem/.

"3 Central Problems That Are Faced By Every Economy Of A Country". Your Article
Library, 2020. https://www.yourarticlelibrary.com/problems/3-central-problems-
that-are-faced-by-every-economy-of-a-country/8812.

"DTI Philippines". Facebook.Com, 2020.

https://www.facebook.com/DTI.Philippines/photos/pcb.10158292118780116/10
158292118165116.

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Schools Division of Bataan - Curriculum Implementation Division Learning
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