INTRODUCTION TO APPLIED

ECONOMICS

Mr. Jhoey C. Poblete III

 ACTIVITY 1

• Create a list of needs of ten (10) people and assign a value to each need

Name Water Food Clothes Electricty

Jhoey Poblete 800 8000 2000 1600
Joanna Estallo 200 10000 5000 4000

• Make your own observations and write a generalization derived from your list as you
explain the role of economics in daily life. Write your answer on your answer on a
separate answer sheet.
 ECONOMICS AS A SOCIAL SCIENCE

• Economics - is the science which studies human behavior as a relationship

between ends and scarce means which have alternative uses.

• Economics - is the study of the ways that individuals and societies allocate
their limited resources to satisfy their unlimited wants.
 I T I S I M P O RTA N T TO R EC O G N I Z E T H E F O L L O W I N G
A S P E C T S O F EC O N O M I CS :

1. It is a science concerned with human behavior.

2. It is concerned with the choices we make and the consequence of these choices
for ourselves and others. In fact the central focus of economics is on choice and
decision making.
3. It is concerned with man’s material welfare.
 THE BEGINNINGS

• Adam Smith – Father of Economics

• 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.
 ECONOMICS AS A SOCIAL SCIENCE

Economics Borrows Ideas from:

• Psychologists
• Sociologists
• Anthropologist
• Legal Scholars
• Ecologists
• Biologists
• Political Scientists
• Philosophers
 ECONOMICS: AN OVERVIEW

• The problems of economics arise out of the scarcity of resources to satisfy

human wants
• Economic Resources: Land, Labor, Capital(Entrepreneurial Ability)
 ECONOMIC RESOURCES

• are factors of production used to produce things that people desire in order to
satisfy their wants. The things that people produces are called commodities
• Commodities may be divided into GOODS AND SERVICES.
• Goods are either TANGIBLE AND INTANGIBLE
 CATEGORIES OF ECONOMIC
RESOURCES

• Land. It includes all natural resources (gifts of nature) used in the production process. These include
mineral and oil deposits, water, fertile soil, air, climate forest, wildlife, and rain. \

• Labor or Human Resources. It refers to the physical and mental talents to produce goods and services.

• Capital. Man-made or manufactured resources or also known as

• capital goods used in producing consumer goods. These include buildings, machine, tools, equipment,
roads, highways, bridges and even software.

• Entrepreneurial Ability. Special skills of an individual needed to produce goods and services like
managerial and organizational skills.
 ECONOMICS AS AN APPLIED SCIENCE

• Applied Economics is the study of economics in relation to real World

situations, as opposed to the theory of economics. It is the application of
economic principles and theories to real situations, and trying to predict what
the outcomes might be.

• Economic theory is a broad concept for the explanation and understanding of

the movement of goods and services in the market. For example, the theories of
the behavior of individuals and institutions engaged in the production,
consumption, distribution and exchange of goods and services.