INTRODUCTION TO APPLIED

ECONOMICS

Presented by:
Pamela G. Santiago
What is Economics?
“kung dalawa kami”
Economics is the scientific study of the
ownership, use, and exchange of scarce
resources - often shortened to the
science of scarcity.
Economics is regarded as a social science
because it uses scientific methods to
build theories that can help explain the
behavior of individuals, groups and
organizations.
The term economics comes from the Ancient Greek words…

• oikos(house)
• nomos(law)
 Economics- as a study, is a social science
that involves the use of scarce resources to
fulfull our unlimited wants.
 OPPORTUNITY COST
When economists refer to the “opportunity
cost” of a resource, they mean the value of
the next-highest-valued alternative use of that
resource.
 ECONOMIC RESOURCES

LAND/ NATURAL

LABOR/ HUMAN RESOURCES CAPITAL

BASIC ECONOMIC PROBLEMS OF SOCIETY
All societies are faced with basic questions in the
economy that have to be answered. There are:

1. What to produce and how much

2. How to produce
3. For whom to produce
APPLIED ECONOMICS

Presented by:
Pamela G. Santiago
Does Land include all natural resources "free
gifts of nature"? Resources that exist
independent of human action.
 Does LABOR input
consist of the physical and
intellectual services
provided by human
being?
 Does the resource called "Capital"
consist of the machinery and equipment
used to produce output?
 ECONOMIC SYSTEM

The economic system is the means through

which society determines the answers to
the basic economic problems mentioned.
Tradition guides
economic decisions such
as production and
distribution. Societies
with traditional
economies depend
on agriculture, fishing,
hunting, gathering, or
some combination of the
above. They use barter
 instead of money. 
This is the authoritative system wherein
decision making is centralized in the
government or a planning committee.
Questions please…..
GROUP ACTIVITY
 EXPLAIN
• Unlimited Wants vs Limited Resources

Demands > Supplies Scarcities