2nd SEM- Q3 M1

ECONOMICS AS SOCIAL AND APPLIED SCIENCE IN TERMS OF NATURE AND SCOPE

So our topic for today is all about Economics as Social and Applied Science in Terms of its Nature and
Scope. At the end of the lesson, you will able to differentiate Economics as Social Science and Applied
Science in terms of Nature and Scope. So anyone has any idea about Economics?
 Economics involves the use of scarce resources to satisfy unlimited wants. It deals with the
production, distribution, and consumption of goods and services.
 Economics is derived from the ancient Greek word “oikonomia” which means family or household
management.

(When we say economics, it is the study of scarcity and how to use our resources and the
production of the resources into goods and services and how to make it grow in order to sustain
the different issues of vital concern to society)

(Example of goods are computers, furniture, phone, bags, etc. while services are house cleaning,
surgery, therapy sessions, etc.)

(Example of natural resources are raw materials, lumber, fish, soil, minerals, and energy
resources. And we have also economic resources and this are labor, land, capital and technology.)

(Scarcity means insufficiency of resources to meet the wants of consumers and insufficiency of
resources for producers that hamper enough production of goods and services.)

ACTIVITY:
1. FOOD
(Many people are not able to eat enough in a day during pandemic and even this time because of
the inflation or price increase.)
2. MONEY
(People are having a problem on saving money because of the inflation.)
3. WATER
(Global warming has caused water resources in some areas to run-short of.)
4. UNEMPLOYMENT
(Overpopulated and oversupply of the labor force have caused many people to be unemployed.)
5. INTERNET ACCESS
(Some students in rural areas are having trouble doing their work or assignments due to lack of
internet access.)
6. SCHOOL SUPPLIES
 (There’s a shortage of school supplies in the market of some remote areas due to the delayed
delivery from the suppliers caused by restrictions on transportation during the pandemic.)
7. MEDICAL SUPPLIES
(Shortages on medical supplies during pandemic.)
(Economics as Social Science and Economics as Applied Science. What is the difference between
the two classifications? Let’s study the difference and evaluate the situation if that situation is
Economics as Social or Applied Science.)
Economics as Social Science
 It explain how a particular social group or socioeconomic class behaves within a society, including
their actions as consumers.
(To make it clear, it is about how people react or behave on the economic situation. Example, our
current situation now is we experience inflation on rice so in that case how people react on that
situation? Of course we complain the high price of the rice.)
Economics as Applied Science
 It is an application of economic theory to determine the likely outcomes associated with various
possible course of action in the real world.
(On the other hand, the applied science is about more on economic theory and how to apply it to
our economy to avoid scarcity or economic problem. Example, the people complain on the high
price of the rice so the Economist or our Government will do a study on how to stop the inflation.)

(Why economics is important in everyday life and it is one of the important subject nowadays?)
The Importance of Economics:
1. Economics plays a critical part on business operation.
(Without the use of economic principles, no businesses can succeed. If the company knows the
economic situation, the law of supply and demand, or conduct a field study, a bigger chance of
success in the future.)
2. The field of economics is vast and diverse.
(It means, when you study about economics you will learn more not only about the economy as
well as the life of every people in facing economic problem and success since economics has
different research areas.)
3. The interaction of economic agents and the way economics run are central to the nature and scope
of economics.
(We will learn also the nature and scope of economics when we study economics.)

NATURE of ECONOMICS
(Several Economist are favor that Economics is a Science while others is in favor to Arts. And this topic is
address in the Nature of Economics. Economics is treated as a Social Science because of the following
features.)

Economics as Social Science because of the following features:

1. It involves a systematized collection of facts and figures.
2. It is based on the formulation of theories and laws.
3. It deals with the cause-and-effect relationship.
(The Economics is considered as Science because of the characteristics that demonstrate the nature of
economics. Various economic theories are built on logical reasoning and real-life scenario and then it’s
consider as science.)

Economics is a social science that studies the relationship between the production and consumption of
commodities and services in a finite resource environment.
(So this is the nature of Economics, as I said earlier when you study Economics you will learn about how
resources produced or how it made into goods and services and how consumed by the consumer our
limited resources that we have.)

The discipline focuses on how economic agents behave or interact both individually (microeconomics) and
collectively aggregate (macroeconomics).
(Anyone has idea about economic agents or who are these agents that engaged on the economic activity?
Economic agents are those who engaged economic activity. And what are those activity? Those economic
activity can be buying, selling, or producing goods and services. Four types of economic agents:
individuals, businesses, governments and central banks. They are called Microeconomics. While
Macroeconomics is the whole economy itself.)

SCOPE (area) of ECONOMICS

(The scope or areas of Economics is divided into two as what I have mentioned earlier. It was
Microeconomics and Macroeconomics)
Two categories of Economics:
1. Microeconomics
2. Macroeconomics

MICROECONOMICS
  Studies the behavior of individual market participants such as consumers, producers, and resource
owners, as well as corporations.
 It also deals with the process of determining the price of the materials or goods and services,
commonly known as Price Theory.
(When we say micro it means small quantities or variations like in Lending there is Micro lending company
and Macro lending company. Micro type of lending (arawan) while Macro type of lending (salary loan,
pension loan, allotment loan, etc. We belong to micro category as consumers, businesses, government,
and banks)
(Microeconomics deals also on processing of determining prices of its goods and services. By determining
its prices, we will base the relationship between supply and demand so the Law of Supply and Demand
nani.)

MICROECONOMICS CHARACTERISTICS:
1. ELASTICITY
(The Law of Demand and Supply is applied on this characteristics, it is the price movement or
measurement according to demand and supply on the resources. Example, fruits like banana let’s
say its price increase by 10 percent due to low of supply from the supplier or farm but because its
Christmas season the demand of bananas is decrease by 20 percent because as we all know that
the sealable fruits during Christmas are those round fruits so there is an adjustment of the price, sa
bisaya pa inaton ang presyo para mahalin kesa malata.)
2. THEORY OF PRODUCTION
(When we say theory it is the set of ideas that gather from the learning on your study on the
production, and to make your theory into realization you need to impose or you need to make an
action on it in an effective way. Example, you have an online business, to make your online
business boom you need to consider delivery especially free delivery on near places from yours)
3. COST OF PRODUCTION
(This theory evaluates the price based on the cost of the resources. When you do pricing on the
products make sure you can do profit. Example, again in online selling we avail products from the
direct sellers to obtain discount and less price on the products especially bulk orders, when you do
pricing on your items na you should consider the expenses you incurred on the items you sell like
shipping fee from the supplier, the income from the items and shipping fee from your buyer in case
it needs shipping fee in order to avoid deficit and losses.)
4. MONOPOLY
(Monopoly system is known to Philippine Economy. When we say monopoly it is a single entity or
seller and no competitors on the business. Example, electricity. We had only one supplier of the
electricity and that is SOLECO that is why the SOLECO have a freedom to do on pricing especially
conducting a price increase since they had no competitors and as consumers we have no choice
on their pricing since we need electricity and the government has no control on it.)
5. OLIGOPOLY
(It is the contrast from the monopoly. The business under oligopoly has competitors and their
pricing is being controlled. Example, Starbucks. Are you familiar with it? Who’s already been in
 Starbucks? Starbucks is a coffee shop but not only coffee they offer but also cakes and other
pastries. They can’t do high pricing on their products since there is a lot of coffee shop across the
country pero mahal gihapon ang Starbucks :D)

MACROECONOMICS
 Is a branch of economics that studies the whole economy and the issues that affect it?
 It is concerned with the nature of economic growth, as well as the extension of productive capacity
and national income.
(When we say macro it is large scale or quantities or variation. Kung sa lending pa dinagko nga mga loan.
It studies the performance of an economy as a whole. Different issues that the economy has encountered
are being tackle on this category. What are those different issues on the economy? Unemployment, growth
rate, inflation, and monetary policy. It is concerned on production capacity and national income of the
economy.)

MACROECONOMICS CHARACTERISTICS:
1. GROWTH
(It investigate the different factors that contribute the economic growth like increasing of country’s
capacity on producing goods and services that results to revenues.)
2. BUSINESS CYCLE
3. UNEMPLOYMENT
(Mentioned already)
4. INFLATION AND DEFLATION
(Inflation means high price and deflation means low price)

WHAT IS ECONOMETRICS?
 Is the application of statistical and mathematical theories to economics for the purpose of Testing
Hypotheses and Forecasting Future Trend?
(Who’s already encountered here Statistics? Lisod or sayon? In Econometrics, it used
mathematical method especially Statistics in describing economic system. )

IMPORTANCE OF APPLICATION OF APPLIED ECONOMIC

1. When economics is applied to a firm, a household, or a country, it helps eliminate any attempts to
make a situation appear worse or better than it is.
(Example, when you put up a business what will the first thing to do to avoid bankruptcy? Aside
from putting up a capital for the business. Anyone? Before opening a business we should conduct
field study especially on the areas you are planning to invest your business. Are you familiar about
 field study? What are the activities during field study? Of course you do a research on the area if
the product you want to sell is applicable on the area or will hit to the consumers. And also the
consumers itself on the area if daghan ba or gamay ra, if your product is needed on the area and
so forth.)
2. Applied economics serves as a framework for determining what activities can be taken to improve
the current economic condition in a reasonable manner.
(Applied economics serves as a guide on determining what to improve on every activities we
engaged in our economy. Example, on a business. When you have already a business since your
business is approve on the area after a field study. You also need to examine what is lacking on
every aspects of your business itself like on buying and selling products and services, the
utilization of raw materials, and in organization there is a division of labor.)
3. Applied economics may educate you the way to avoid making costly mistakes.
(Applied economics is our guidance and educator on facing different situation in our economy.
Again in business, when you applied it, it can help you to avoid any mistakes. To learn every steps
on how to improve and correct the situation will lead to success and continue to do good
strategies.)