APPLIED ECONOMICS

Economics as an Applied Science

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 CHAPTER 1
Introduction to
Applied Economics

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 LESSON 1.2
Economics as an Applied Science

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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

Economics as an Applied Science WWW.REXBOOKSTORE.PH

Chapter Learning Objectives
• To describe and state the importance of economic resources
• To differentiate between positive and normative economics
• To differentiate between gross national product and gross domestic
product
• To distinguish the different approaches used in solving for the gross
national product

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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

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Terms to Remember in Chapter 1
• Economics • Capital • Gross National Product (GNP)
• Scarcity • Economic system • Gross Domestic Product (GDP)
• Social science • Traditional • Applied economics
• Macroeconomics economy • Unemployment
• • Command • Poverty
Microeconomics
economy • Poverty line
• Opportunity cost
• Market economy
• Economic • Positive
resources
economics
• Land
• Normative
• Labor economics

Economics as an Applied Science WWW.REXBOOKSTORE.PH

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.

Economics as an Applied Science WWW.REXBOOKSTORE.PH

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.

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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

Economics as an Applied Science WWW.REXBOOKSTORE.PH

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 an efficiently run

country and a leader who brought prosperity
unheard of before his tenure.
Source:
By Robert D. Ward - Cropped by Ranveig from
http://www.defenselink.mil/photos/newsphoto.aspx?
newsphotoid=3963

Economics as an Applied Science WWW.REXBOOKSTORE.PH