ACTIVITY

◦ Write 15 words that are connected with the word

‘’ECONOMICS’’.

◦ Connect the words you have written to construct

your own definition of Economics.
 INTRODUCTION TO
APPLIED ECONOMICS
Learning Objectives
◦ Understand the concept of scarcity
◦ Enumerate the types of scarcity
◦ Explain Opportunity Cost
◦ Define Economics
What is Scarcity?
◦ Is a condition where there are insufficient resources to satisfy
all the needs and wants of a population.
◦ It is the basic and central economic problem confronting
every society.
◦ It is the heart of the study of economics and the reason
behind its establishment
SCARCITY may be RELATIVE or
ABSOLUTE
RELATIVE SCARCITY- is when the good is
scarce compared to its demand
ABSOLUTE SCARCITY- is when supply is
limited
RELATIVE SCARCITY
◦ Coconuts are abundant in the Philippines since the plant easily grows in
our soil and climate. However, coconuts become scarce when the supply
is not sufficient to meet the needs of the people.
◦ Bananas are abundant in the Philippines and are being grown in a lot of
region around the country. But when a typhoon destroys banana plants
and the farmer has no bananas to harvest, the bananas becomes relatively
scarce.
◦ RELATIVE SCARITY OCCURS NOT BECAUSE THE GOOD IS
SCARCE AND IS DIFFICULT TO OBTAIN BUT BECAUSE OF THE
CIRCUMSTANCES THAT SURROUNDS THE AVAILABILITY OF
THE GOODS.
ABSOLUTE SCARCITY
◦ Oil is absolutely scarce in the country since we have no oil
wells from which we can source our petroleum needs, so
we rely heavily on imports from oil-producing countries
like Iran and other Middle East Countries.
◦ Cherries are absolutely scarce in our country since we do
not have the right climate to grow them and we have to
rely on imports for our supply of cherries.
Scarcity can be caused by many things including:
1. Lack of Natural Resources
2. Climate Problems
3. War
4. Bad Economic Management
5. Bad Transport Infrastructures
6. Government Policy
What is Economics?
◦ Comes from the greek word ''Oikon'' which means
home and ''Nomos'' which means management
◦ECONOMICS AS SOCIAL SCIENCE because it
studies human behavior.
◦ECONOMICS AS APPLIED SCIENCE- it uses
the scientific method in its explanations, which
consists of observing reality and presenting
questions and problems to arrive at the
formulation of theories and models.
THE FIELDS OF ECONOMICS

◦MACROECONOMICS
◦MICROECONOMICS
Microeconomics
◦ Concerned with the behaviour of individual entities such as
consumer, the producer, and the resource owner.
◦ It is concerned on how goods flow from the business firm to the
consumer and how the resources move from the resource owner to
the business firm.
◦ It is concerned with the process of setting prices of goods
◦ It studies the decision and choices of the individual units and how
these decision affect the prices of goods in the market.
 Macroeconomics
◦ Is a division of economics that is concerned with the overall
performance of the entire economy.
◦ It studies the economic system as a whole rather than the individual
economic units that make up the economy.
◦ It focuses on the overall flow of goods and resources and studies the
causes of change in the aggregate flow of money, the aggregate
movement of goods and services and the general employment of
resources.
◦ It is about the nature of economic growth, the expansion of
productive capacity and the growth of national income
MACRO OR MICRO?
◦The inflation rate in the Philippines in
the third quarter of 2022 was 6.3 %
MACRO OR MICRO?

◦Prices of Ford vehicles are

predicted to go up in December.
MACRO OR MICRO?
◦The Philippine Economy grew at the rate
of 5.8% in 2013.
MACRO OR MICRO?
◦Unemployment rate has dropped
because of the increase in the number
of OFW's.
MACRO OR MICRO?
◦Philippine Congress passed the Value
Added Tax Law to strenghten the
Philippine Tax System
What is Opportunity Cost?
◦It refers to the value of the best forgone
alternative.
ECONOMIC RESOURCES/ FACTORS OF
PRODUCTION
Are the resources used to produce goods and services.
These resources are , by nature, limited and therefore,
command a payment that becomes the income of the
resource owner.
Factors of Production
◦ Land
◦ Labor
◦ Capital
◦ Entrepreneurship
Factors of Production
◦ LAND -soil and natural resources that are found in
nature and are not man-made.

◦ Owners of Land receive a payment known as RENT

◦ LABOR- physical and human effort exerted in production.
◦ -it covers manual workers like construction workers,
machine operators and production workers, as well as
professional like nurses, lawyers and doctors.
◦ The income received by labors is referred to as
WAGE.
◦ CAPITAL- man-made resources used in the production of
goods and services, which include machineries and equipment.
◦ The owner of capital earns an income called INTEREST.
◦ENTREPRENEURSHIP- the process of
starting one's own, new and small business
Basic Economic Problems of Society
◦ All societies are faced with basic questions in the
economy that have to be answered in order to cope
with constraints and limitations. These are:
1. What to produce and how much
2. How to produce
3. For whom to produce
ACTIVITY
WHAT IS THE IMPORTANCE OF
ECONOMICS TO YOU AS A STUDENT?
EXPLAIN