ECONOMICS

AS
A
SCIENCE
LESSON 1
 WHAT IS
ECONOMICS?
 ECONOMICS

SOCIAL
SCIENCE

responds to divided into important in

The Three Fundamental TWO Explaining Economic Evens

Questions BRANCHES and Setting Economic
Policies
Economics is one of the important fields that must be
studied in order to make sense of important events
around us. It deals with decisions that leads us to the
satisfaction of human wants. 

But how does the study of economics helps us

understand the world around us?
DEFINITION OF ECONOMICS

According to them, ECONOMICS

is the study of how societies use
scarce resources to produce
valuable commodities and
distribute them among different
people. 

SAMUELSON and NORDHAUS

DEFINITION OF ECONOMICS

Economics is the science which

studies human behavior as a
relationship between ends and
scarce means which have
alternate uses.

LIONEL ROBBINS
British Economist
DEFINITION OF ECONOMICS

Economics is the study of how

individual and society generally
makes choices that involves the
use of scarce resources from
among alternative wants that
needs to be satisfied. 
GERARDO SICAT
Philippine Economist
THREE IMPORTANT CONCEPTS 
• Scarcity of resources
• Non-satiation of wants
• The need to decide how scarce resources are to
be used.
ECONOMICS is the study of
how society decides to allocate
scarce resources in order to
satisfy the most important wants
of the people. 
 ECONOMICS
OIKONOMIA

GREEK WORDS
OIKOS NEMEIN

Household or Management or
Family Distribution

HOUSEHOLD
MANAGEMENT
THREE FUNDAMENTAL
QUESTIONS IN ECONOMICS
 BRANCHES OF ECONOMICS
MICROECONOMICS MACROECONOMICS

Deals with the behavior of Deals with the economy as a

individual in the market. whole.
 BRANCH OF SCIENCE

NATURAL SCIENCE SOCIAL SCIENCE

Fields that are more inclined Fields that are more inclined
towards natural objects and with the study of individuals,
phenomena. groups, and institutions that
form a society.
ECONOMICS IS A SOCIAL
SCIENCE
• It is a systematic field of study that focuses in
the interaction of the different units of society.

• It makes use of the scientific method to examine

and explain how society makes choices regarding
the use of scarce resources in order to respond
to human wants.
 POSITIVE AND NORMATIVE
ECONOMICS
POSITIVE ECONOMICS
• Involves a description of a
situation.
• It describes and explains
economic phenomena using
various concepts and ideas in
economics.
• Positive statements can be
proven through the use of
scientific method.
NORMATIVE ECONOMICS
• Gives a suggestion of what to be
done in a particular situation.
• Gives value-laden statements
about what should be done.
• Although it includes factual
ideas, proving and disproving
normative statements are
difficult.
Examples of Positive and Normative
Economics
POSITIVE ECONOMICS:
• If the price of the luxury good increases, its quantity demanded decreases

NORMATIVE ECONOMICS:
• If the price of the luxury good increases, individual’s should lessen the
consumption of this good.
________________________________________________________________

POSITIVE ECONOMICS:
• If the government raises the tax on beer, this will lead to a fall in profits of the
brewers.
NORMATIVE ECONOMICS:
• Pollution is the most serious economic problem.
LET’S TRY
1. Unemployment is more harmful than inflation,
2. The congestion charge for drivers of petrol-guzzling cars should increase to P1000,
3. A car scrappage scheme will lead to fall in the price of second hand cars.
4. Cut-price alcohol has increased the demand for alcohol among teenagers.
5. Higher interest rates will reduce house prices.
6. The retirement age should be raised to 70 to combat the effects of our ageing
population,
7. A fall in incomes will lead to a rise in demand for own-label supermarket foods.
8. A rise in average temperatures will increase the demand for sun screen products.
9. The government is right to introduce a ban on smoking in public places,
10. Resources are best allocated by allowing the market mechanism to work freely,