Applied Economics

CHAPTER 1
Introduction to
Applied Economics
 LESSON 1.2
Economics as an
Applied Science
Chapter Learning Objectives
• To differentiate between economics as a social
science and as an applied science
• To apply the concept of opportunity cost when
evaluating options and making economic decisions
• To make decisions based on how man can satisfy
most of his wants given limited resources
• To differentiate macroeconomics and
microeconomics
Chapter Learning Objectives
• To describe and state the importance of economic
resources
• To differentiate positive and normative economics
• To differentiate gross national product and gross
domestic product
• To distinguish the different approaches used in
solving for the gross national product
Chapter Learning Objectives
• To identify the basic problems of the Philippine
economy
• To analyze basic economic problems and
propose solutions to the problems using the
principles of applied economics
• To describe the various economic systems
 Terms to Remember in
Chapter 1
• Economics • Traditional economy
• Scarcity
• Social science • Command economy
• Macroeconomics • Market economy
• Microeconomics
• Opportunity cost • Positive economics
• Economic resources
• Normative economics
• Land
• Labor • Gross National Product (GNP)
• Capital
• Gross Domestic Product (GDP)
• Economic system
• Applied economics
• Unemployment
• Poverty
• Poverty line
 Applied Economics Definition

What is APPLIED ECONOMICS?

 It is the application of economic theory and

econometrics in specific settings with the goal of
analyzing potential outcomes.
 It is typically characterized by the application of the core,
referring to economic theory and econometrics, as a means
of dealing with practical issues in fields that include
demographic economics, labor economics, business
economics, agricultural economics, development
economics, education economics, health economics,
monetary economics, economic history, and many others.
Applied Economics and the Philippine
Economic Problems
Applying economic theory in your
lives means trying to address
actual economic issues and be
able to do something about them.
The concept of scarcity and choice
should encourage you as
individuals to help in your own
way to provide solutions to the
country’s economic problems.
The Philippines’ Basic Economic
Problems
Despite the relatively impressive
economic performance of the Philippines
the past few years, many people,
especially the poor, have been
complaining about not feeling its benefits.

 Unemployment

 Poverty

 Booming population
 Lee Kuan Yew: An ASEAN Icon
 He was the prime minister of
Singapore from 1959 to 1990.
 He is an economic icon and an
example of how a leader of a
previously undeveloped country
can lead to overcome its
country’s basic economic
problems and move toward
economic growth.
 He has left behind a legacy of
Source: an efficiently run country and a
By Robert D. Ward - Cropped by Ranveig from
http://www.defenselink.mil/photos/newsphoto.aspx? leader who brought prosperity
newsphotoid=3963
unheard of before his tenure.