SHS

Applied Economics
Week 6: Module 6
ABM/GAS - Applied Economics
Grade 11/12: Week 6: Module 6
First Edition, 2020

Copyright © 2020
La Union Schools Division
Region I

All rights reserved. No part of this module may be reproduced in any form
without written permission from the copyright owners.

Development Team of the Module

Author: Kay Owen L. Boado, T-III

Editor: SDO La Union, Learning Resource Quality Assurance Team

Illustrator: Ernesto F. Ramos Jr., P II

Management Team:

ATTY. Donato D. Balderas, Jr.

Schools Division Superintendent

Vivian Luz S. Pagatpatan, PhD

Assistant Schools Division Superintendent

German E. Flora, PhD, CID Chief

Virgilio C. Boado, PhD, EPS in Charge of LRMS

Lorna O. Gaspar, EPS in Charge of Applied Economics

Michael Jason D. Morales, PDO II

Claire P. Toluyen, Librarian II
Applied Economics
Week 6: Module 6
 Target

All communities are faced with questions about what are the goods and
services should be produced, how these should be produced and who will
consume these. We know the answers to these questions would lead us to
identify problems and possible solutions to existing economic issues.

In the previous modules, you were introduced to the basic terms used in
Applied Economics. These terms will help you to better understand applied
economics and the current situations faced by our country. In this lesson you
will be identifying the basic economic problems of the country of scarcity.

This learning material will help you to know the law of supply and
demand, and factors affecting the economic situation and conduct a survey of
current economic situations within the vicinity.

After going through this module, you are expected to:

Analyze the effects of contemporary issues such as migration, fluctuations in
the exchange rate, oil price increases, unemployment, peace and order, etc. on
the purchasing power of the people. ABM_AE12-Ie-h-8

Subtasks:
1. Define what is investment, rent, minimum wage and tax?
2. Explain the difference between a need and a want.
3. Sketch the economic issues in your community that might affect the way of
living of people.
4. Distinguish these economic issues and give necessary suggestion/s to solve
the problem.
Before going on, check how much you know about this topic. Answer
the pre-test on the next page in a separate sheet of paper.

Jumpstart
You have learned from the previous module that applied economics is the
application of economic principles and theories to real-world situations in order
to predict future outcomes. Therefore, it makes sense that if you will apply the
economic theories that you will learn in your life and the community you’re at,
you may actually be able to address actual economic issues and do something
about it.

Direction: To further check your knowledge with our topic, arrange the following
jumbled words below. These are the words you most encounter in economic
issues.

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1. DUENYOMELP - - out or work.
2. PTVETRO - - inability to meet basic needs.
3. RNDUE TEMNENENYLPO - - a situation which
someone/something is not used as much as they should be.
4. NMGIAROTI - - movement of people between countries.
5. ACPEE DAN RROED - - an essential ingredient
in maintaining economic development, social order and political stability.

For you to be understand the lesson well, do the following activities.

Have fun and good luck!

Discover

All societies face the economic, which is the problem of how to make the
best use of limited or scarce resources. The economic problem exist because
although the needs and wants of people are endless, the resources available to
satisfy the needs and wants are limited.

Limited Production Unlimited

scarce needs and
resources wants

Figure 1: The economic problem is to match limited resources to unlimited needs

and wants.

Choice and opportunity cost are two fundamental concepts in

economics. Given that resources are limited, producers and consumers have to
make choices between competing alternatives. Individuals must choose how
best to use their skill and effort, firms must choose how best to use their
workers and machinery, and governments must choose how best to use
taxpayer’s money.

Making an economic choice creates a sacrifice because alternatives must

be given up. Making a choice results in the loss of benefit that an alternative
would have provided. For example, if an individual has El 0 to spend, and if
books are El 0 each and downloaded music tracks are El each, buying a book
means the loss of the benefit that would have been gained from the 10
downloaded tracks. Similarly, land and other resources, which have been used
to build a school could have been used to build a factory. The loss of the next
best option represents the real sacrifice and is referred to as opportunity cost.
The opportunity cost of choosing the school is the loss of the factory, and what
could have been produced.

It is necessary to appreciate that opportunity cost relates to the loss of the next
best alternative, and not just any alternative. The true cost of any decision is
always the closest option not chosen.

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 CONTEMPORARY ECONOMIC ISSUES FACING THE
FILIPINO ENTREPRENEUR
1. Investment and Interest Rate
Investment - Is an asset or item that is purchased with the hope that it
will generate income or will appreciate in the future.

Kinds of Investments:
a. Bank Products – Banks and credit unions can provide a safe and convenient
way to accumulate savings—and some banks offer services that can help you
manage your money. Deposits at banks and most credit unions are federally
insured up to a limit set by Congress. And transaction (or checking) accounts
and deposit accounts offer liquidity, making it easy for you to get to your funds
for any reason—from day-today expenses to a down payment or money for
unexpected emergencies. In addition to being insured by the FDIC, checking
accounts let you transfer money by check or electronic payment to a person or
organization that you designate as payee.

b. Bonds - A bond is a loan an investor makes to a corporation, government,

federal agency or other organization in exchange for interest payments over a
specified term plus repayment of principal at the bond's maturity date. There
are a wide variety of bonds including Treasuries, agency bonds, corporate bonds,
municipal bonds and more. Likewise there are many types of bond mutual
funds.

c. Stocks - When you invest in a stock, you become one of the owners of a
corporation. Stocks represent ownership shares, also known as equity shares.
Whether you make or lose money on a stock depends on the success or failure
of the company, which type of stock you own, and what's going on in the stock
market overall and other factors. Stocks and stock mutual funds often can be
an important component of a diversified investment portfolio. Learn more
about different types of stocks and how to assess whether a given stock is right
for you.

Investments and interest rate - Changes in interest rates affect the public’s
demand for goods and services and, thus, aggregate investment spending. A
decrease in interest rates lowers the cost of borrowing, which encourages
businesses to increase investment spending.

2. Rentals - In economics, rent is any payment to a factor of production in excess

of the cost needed to bring that factor into production.

3. Minimum Wage - It is the lowest wage, determined by law or contract that an

employer may pay an employee for a specified job.

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a/ Granted P25 increase in basic pay; integration of the PIO COLA into the basic
pay b/ Granted P15 - P35 increase in basic pay and PIO COLA
c/ Granted PI 7-P30 increase in basic pay for non-agriculture sector; P26-P30
increase for agriculture
d/ Granted P5 to P25 increase in basic pay
e/ Granted P20 increase in basic wage increase.
f/ Granted P14-P21 increase in basic pay upon effectivity; there shall be one
wage rate for agriculture per covered area classification to be given in 2 tranches;
accelation of the implementation of the remaining tranches (3rd to 7th) per WO
17 to areas from PO.50 - P5 to further simplify the wage rates per sector & area
classification
g/ Granted P20 increase in basic pay for establishments w/ 10 workers &
above; & P12 increase for establishments w/ less than 10 workers
h/ Granted P20-P30 increase in basic pay to be given in two tranches
i/ Granted P15-P30 increase in basic pay
j/ Granted P8-P48 increase in basic pay
k/ Granted P20 increase in basic pay to be given in two (2) tranches: PIO upon
effectivity and PIO on the 7th month from effectivity.
l/ Granted P20 increase in basic pay
m/ Granted P27 - P35 increase in basic pay
n/ Granted P56 increase in basic pay to be given in two tranches; P30 upon
effectivity and P26 on February 16, 2019.
o/ Granted P25 increase in basic pay to be given in two tranches: P15 upon
effectivity and PIO on May 1, 2020.
p/ Integration of COLA under WO No. 15 into the basic pay and granted P15
new COLA
q/ Granted PIO-P20 wage increase; PIO-24 increase for Cotabato City and 63
barangays in North Cotabato.
SOURCE: National Wages and Productivity Commission - Department of Labor
and Employment

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4. Taxes - enforced proportional contributions generally payable in money,
levied by the legislature or law making body of the State by virtue of its
sovereignty on persons, property and acts or transactions for the support of
the government and all public needs.
BASIC ECONOMIC PROBLEMS OF THE PHILIPPINES
Philippines as a growing country is not exempted from experiencing economic
problems. Under the Duterte administration, the country has significantly
improved its economic marks, however, problems still exist. Take a look at the
following scenario and examine or identify the economic problem present in it.

Situation #1: You are a fresh graduate at a eminent university. You graduated
as cum laude and received recognition awards. You took up a business course
and took up an education unit course in order to become a teacher, however,
after graduating, you could not find available jobs within the city. What
economic problem is present and is affecting you here?

1. In this situation, you are affected by the so-called unemployment

problem, which is still a basic problem of the country. According to PSA
(Philippine Statistics Authority, the unemployed include all persons who are
15 years and over as of their last birthday and are reported as: (1) without
work and currently available for work and seeking work; or (2) without work and
currently available for work but not seeking work for the following reasons:
Tired/believed no work is available; awaiting results of previous job
application; temporary illness/disability; bad weather and; waiting for
rehire/job recall.

According to the records of PSA (Philippine Statistics Authority), the

unemployment rate in the year 2018 is at 5.3% and this went down a little bit
in the year 2019 becoming 5.2%. These figures show that there is still a huge
number of Filipinos who are not working. Not having a job means not having a
source of income to provide for our personal needs and wants, not being able to
being prone to scarcity issues. Unemployment has been an issue in the country
for many years which is why the government is seeking ways to address the
problem.

Situation #2: Suppose that you, being the eldest of five siblings were not able
to finish your studies. You were forced to stop going to school at the age of 13
and find a job at an early age in order to support your siblings. What economic
problem can be seen here?

2. In this situation, you are affected by the number one problem of the
country which is poverty.

The booming population growth in the Philippines is another basic

economic problem that can be connected to the issue of scarcity. When
population becomes too big, economic resources may no longer be enough to
support the increasing number of people. Food, water, shelter, medicine and
other resources wouldn’t be enough to satisfy every people’s needs and wants.

On a 2015 report by the Philippine Statistics Authority (PSA), five (5) out
of nine (9) basic sectors of the economy are considered very poor. The farmers
came first, followed by fishermen, children, self-employed and unpaid family
workers, and women. You see, those who do hands-on jobs usually get lower
incomes. This is even the reason why Filipinos tend to go abroad as they get
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better pays outside the country.

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 All of the country’s basic economic problems vary with times and
circumstances. Unemployment, underemployment, poverty and population
increase are just few of the basic economic problems faced by our country. These
problems are linked to scarcity. These problems would not have occurred if the
resources or supplies are equally distributed to suit to the needs and wants of
people. It is now a challenge for you to observe and identify other economic
problems so you may be able to think about it and reflect on how you could help
in solving it.

Situation #3: You are a newly-registered pharmacists. You wanted to immediately

find a job to save enough money for your sick mother’s hospitalization. There
is no other available job opportunity in the area except for an immediate hiring
for a call-center agent representatives. You got the job and you’re now a
contact center agent. What economic problem is present and is affecting you
here?

3. In this situation, you are affected by the so-called underemployment

problem, which is also among the basic problems of the country. Accordingly,
labor that falls under the underemployment classification includes those
workers who are highly skilled but working in low paying jobs, workers who are
highly skilled but working in low skill jobs and part-time workers who would
prefer to be full time.

According to the records of PSA (Philippine Statistics Authority), the

underemployment rate in the year 2018 is at 18.0% and this went down a little
bit in the year 2019 becoming 15.6%. There is a decrease in the percentage rate
which means the Philippines is getting better, however it remains to be an
economic problem. Having a job that doesn’t match your skills still boils down
to being prone to scarcity issues.

Explore
Here are some enrichment activities for you to work on to master
and strengthen the basic concepts you have learned from this
lesson.

Enrichment Activity 1: TRY TO REMEMBER ME IN A PUZZLE!

Directions: Copy and answer in a separate sheet of paper.
Across:
1. Also called as Capital goods.
5. Amount of due per period, as a proportion of the amount lent, deposited or
borrowed.

Down:
2. Levied in almost every country of the world.
3. It is a necessity.
4. The amount of remuneration that an employer is required to pay wage earners
for the work performed during a giver period of time.

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Assessment 1: LIST ME!
After earning P2000 in your summer job. What are the things you are
going to do with your P2000? List down the items you would like to purchase
according to personal priorities. Explain what is a need and a want?
Score Particular
5 pts. Shows a thorough understanding of the correct or material and
extends the understanding beyond the requirements (offering
new ideas or by demonstrating a level of skill beyond
expectations for proficiency.
4 pts. Show a complete and correct understanding of the concept.
3 pts. Shows a partial mastery or incomplete understanding of the
concept.
2 pts. Lack of understanding of the concept.

Enrichment Activity 2: REMINISCING THE PAST!

Ask any member of your family about the Marcos Regime way back
1972. Ask them what happen in that time about the Philippine Economy in
terms of migration, fluctuations in the exchange rate, oil price increases,
unemployment, peace and order, etc. on the purchasing power of the people.
Write your reflection on a one whole sheet of paper.

Assessment 2: LET’S DRAW!

At this point, you will make a poster showing one problem of an entrepreneur
(such as migration, fluctuations in the exchange rate, oil price increases,
unemployment, peace and order, etc. on the purchasing power of the people)
in your community. The scoring rubrics on the next page will be used in
assessing your output.

What you need:

One short bond paper, marker, pencil, coloured pencils, basic crayons.

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 What to do:
Distinguish and draw a problem in your community that is an economic issue,
then suggest a solution to overcome the problem.

Great job! You have understood the lesson. Are you now ready to summarize?

Deepen
Cut out at least 2 pictures from newspapers or any unused magazines
which for you represents a particular economic problem. Paste it in a short
bond paper and write a short caption identifying the economic problem
present in it and suggest a possible solution to the economic problem.

What you need:

Old, magazines, scissors, pencil/pen/marker, short bond paper, glue/paste.

What to do:
1. Cut the drawings on a newspaper/s or magazine/s you have.
2. Paste on a piece of coupon bond.
3. Identify what economic problem it is and suggest a possible solution to the
economic problem.

Gauge

ANSWER ME, PLEASE?

Directions: Read carefully each item. Use a separate sheet for your answers.
Write only the letter of the best answer for each test item.
1. What do you call things that you gave up when you make a choice?
A. Choice C. Problem
B. Opportunity cost D. Trade-off

2. What do you call the application of economic principles and theories to real-
world situations?
A. Applied Economics C. Macroeconomics
B. Economics D. Microeconomics

3. What do you call the condition in which our wants are greater than our
limited resources?
A. Economics C. Scarcity
B. Opportunity Cost D. Trade-off
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 4. Which of the following classifications does not fall under underemployment?
A. Highly skilled but working in low paying jobs
B. Part-time workers who would prefer to be full time.
C. Without work and currently available for work
D. Workers who are highly skilled but working in low skill jobs

5. When does underemployment occur?

A. It is when a person does have work
B. It is when a person does not have work
C. It when a person does not work for a job that fits his/her skills.
D. It is when a person works for a job that fits his/her skills.

6. Which of the following is not a factor of production?

A. Capital C. Labor
B. Tax D. Land

7. What is supply?
A. It is a choice that you gave up
C. It is the totality of our needs
B. It is the amount of goods for sale
D. It refers to the economy

8. What is enforced proportional contributions generally payable in

money, levied by the legislature or law making body of the State by virtue
of its sovereignty on persons, property and acts or transactions for the
support of the government and all public needs?
A. Investment C. Rental
B. Minimum Wage D. Tax

9. According to Philippine Statistics Authority (PSA) what is the minimum age

that a Filipino must have in order to be classified as an unemployed person?
A. 13 years old C. 15 years old
B. 14 years old D. 18 years old

10. What is the main reason why we are studying economics?

A. Poverty C. Trade-off
B. Scarcity D. Unemployment

11. In economics, what is any payment to a factor of production in excess of

the cost needed to bring that factor into production?
A. Investment C. Rental
B. Minimum Wage D. Tax

12. What is the lowest wage, determined by law or contract that an employer
may pay an employee for a specified job?
A. Investment C. Rental
B. Minimum Wage D. Tax

13. What is most likely to happen when the population continues to rise?
A. Employment rate will go up
B. Poverty rate will decrease
C. Resources will become scarce
D. Unemployment rate will go down
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 14. What is the state or condition in which a community lacks the financial
resources and essentials for a minimum standard of living?
A. Economics C. Poverty
B. Opportunity Cost D. Scarcity

15. What are you experiencing when your wants are greater than your
resources?
A. Poverty C. trade-off
B. Scarcity D. unemployment

Great job! You are almost done with this module.

References
Book:

Rosemary P. Dinio, PhD and George A. Villasis. 2017. Applied

Economics. Manila: Rex Book Store, Inc.

Websites:

https://www.economicsonline.co.uk/Competitive_markets/The_econom
ic_problems.html

https://www.finra.org/investors/learn-to-invest/types-investments

https://www.businessmanagementideas.com/economics/rent-meaning-
and-types-economics/10311

htpps://www.international.org/guide/global/fiscal-residency

2017. Philippine Statistics Authority. June 30. Accessed January 27, 2020.
https://psa.gov.ph/poverty-press-releases/nid/120251

2017. Philippine Statistics Authority. June 30. Accessed January 27, 2020.
https://psa.gov.ph/content/employment-rate-january-2019-estimated-
948-percent

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KEY ANSWERS:

15. B. 10. B. 5. C.
14. C 9. C. 4. C.
13. C. 8. D. 3. C.
12. B. 7. 2.
!ELZZUP A IN EM REBMEMER TO YTR :1 ytivitcA C
11.tnmehcirnE 6..
B A. D.
1.
B. GAUGE:

PUZZLE!
Enrichment Activity 1: TRY TO REMEMBER ME IN A

5. PEACE AND ORDER

4. MIGRATION
3. UNDEREMPLOYMENT
2. POVERTY
1. UNEMPLOYED
JUMPSTART:

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