Lesson 1: Revisiting Economics as a

Social Science
At the end of the lesson, the learners will be able to:

1. Define Economics
2. Determine the importance of economics
2. Describe the nature of economics.
What is Economics?

• According to Fajardo, economics is the proper allocation and efficient

use of available resources for the maximum satisfaction of human
wants.
• Samuelson states that economics is the study of how societies use
scarce resources to produce valuable commodities and distribute them
among different people.
•Economics, according o Nordhaus, is the science of choice. It studies
how people choose to use scarce resources or limited productive
resources (labor, technical, knowledge) to produce various
commodities and to distribute these commodities for consumption.
• Sicat defined economics as a scientific study which deals with how
individuals and society in general make choices.
• Castillo viewed economics as the study of how man could best allocate
and utilize the scarce resources of society to satisfy his unlimited
wants.
•Webster defined economics as a branch of knowledge that deals with
the production, distribution and consumption of goods and services.
 Branches of Economics

Macroeconomics
deals with economic behaviour of the whole economy to its
aggregates such as government, business and households. Is concerned
with the topics like gross national product, level of employment,
national income, general level of prices, total expenditures, etc. It is also
known as employment and income analysis.
 Branches of Economics

Microeconomics
deals with economic behaviour of individual units such as
consumers, firms, and the owners of the factors of production. For
example, the price of rice, the number of workers of a certain firm, the
income of Mr. X, the expenditures of PLDT, etc. It is also known as the
Price Theory.
 Divisions of Economics

1. Production
this refers to the process of producing or creating goods needed
by the households to satisfy their needs. The factors of production are
called inputs and the goods and services that have been created called
outputs of production.
2. Distribution
this refers to the marketing of goods and services to different
economic outlets for allocation to individual consumers.
 Divisions of Economics

3. Exchange
this is a process of transferring goods and services to a person
or persons in return for something.
4. Consumption
this refers to the proper utilization of economic goods.
5. Public Finance
this pertains to the activities of the government regarding
taxation, borrowings, and expenditures.
 Tools of Economics

1. Logic
is a science that deals with sound thinking and reasoning.
2. Mathematics
is a science that deals with numbers and their operations.
3. Statistics
is a branch of mathematics engages with the analysis and
interpretation of numerical data.
 The Economic Resources

1. Land
is considered as economic resources because it has price
attached to it.
2. Labor
refers to all human efforts, be it mental or physical, that
help to produce want satisfying goods and services.
 The Economic Resources

3. Capital
-can represent the monetary resources companies use to
purchase natural resources, land and other capital goods.
- it represents the major physical assets individuals and
companies use when producing goods or services.
4. Entrepreneurs
is the organizer and coordinator of other factors of
production: land, labor, and capital.
 The Economic Resources

5. Foreign Exchange
- this refers to the dollar and dollar reserves that the
economy has.