APPLIED ECONOMICS

RIZELLE ANGELICA N. BITUIN

INSTRUCTOR
 Nature and Scope of Economics

Economics

- came from the Greek word “oekonomia” which

means household management.
 Definition of Economics

- It is a field of knowledge that studies the

production, distribution and consumption of goods
and services.
 Definition of Economics

- it is a social science that deals with the study of

proper allocation and efficient utilization of scarce
productive resources to produce goods and services for
the maximum satisfaction of unlimited human wants
and needs.
 Why is economics a social science?

Economics is a social science definitely because it

deals with the study of man’s life and how he lives
with other people.
 The Relation of Economics to other Social Sciences

History
Geography
Political Science
Philosophy
Mathemics
Ethics
 Economics as a Science

Determine the problem

Formulate hypothesis or wise guess
Gather pertinent data through observation, surveys,
experimentation, interviews and others.
Analyze and interpret the data gathered
Make conclusion and generalization from your
findings.
 The Circular Flow Diagram
Spending Revenues
Product Markets
Goods and Services Goods and
Purchased Services Sold

Flows of Goods and Services

Households Firms
Flow of Pesos

Labor, Land, Capital Inputs for

and Entrepreneurship Production

Factor Markets
Income Wages, Rent, Interest
and Profits
 Branches of Economics

Microeconomics

- deals with individual behavior of firms and household.

Macroeconomics

- studies the overall or aggregate behavior of the economy as

a whole.
 Positive and Normative Economics
Positive Economics
- refers to the statement of what will happen?

Normative Economics
- refers to the statement of opinion and stating
what should be done or what ought to be.