APPLIED

ECONOMICS 12
Learning Competency from the
MELC’s

Examine the utility and application of

applied economics to solve economic issues
and problems. (ABM_AE12-Ia-d-3)
Specific Objectives

a. List basic economic problems of society.

Let’s have an
activity!

Enumerate Me!
Enumerate the following general idea:

1. What are the classification of

resources?
2. Who are the agents of economics?
3. What are the types of economics?
4. What are the classification of goods?
Thank you! For your
answers….
Let’s have the
discussion!
BASIC ECONOMIC
PROBLEMS OF
SOCIETY
All societies are faced with basic questions in
the economy that must be answered to cope
with constraints and limitations. These are:

1. What to produce and how much –

society must decide what goods and services
should be produced in the economy. Having
decided on the nature of goods that will be
produced, the quantity of these goods should
also be decided on.
All societies are faced with basic questions in
the economy that must be answered to cope
with constraints and limitations. These are:

2. How to produce – is a question on the

production method that will be used to
produce goods and services. This refers to the
resource mix and technology that will be
applied in production.
All societies are faced with basic questions in
the economy that must be answered to cope
with constraints and limitations. These are:

3. For whom to produce – is about the

market for goods and services. For whom will
the goods and services be produced? The
young or old, the male or female market, the
low-income or the high-income groups?
ECONOMIC SYSTEMS
The economic system is the means through
which society determines the answers to the
basic economic problems mentioned. A
country may be under any of the following
types or even a combination of the three
economic systems:
1. Traditional economy. Decisions are
based on traditions and practices upheld over
the years and passed on from generation to
generation. Methods are stagnant and
therefore not progressive. Traditional
societies exist in primitive and backward
civilizations.
2. Command economy. This is the
authoritative system wherein decision-making
is centralized in the government or a planning
committee. Decisions are imposed on the
people who do not have a say in what goods
are to be produced. This economy holds true
in dictatorial, socialist, and communist
nations.
3. Market economy. This is the most
democratic form of an economic system.
Based on the working of demand and supply,
decisions are made on what goods and
services to produce. People’s preferences are
reflected in the prices they are willing to pay
in the market and are therefore the basis of
the producers’ decisions on what goods to
produce.
WHY IS ECONOMICS
IMPORTANT?
For idea how important the subject is, all you
need to do is read pages of the newspapers to
see that the most important news is economic
in nature. Watch the news on TV and for sure,
economic news always presents important
issues.
Economics will help you understand why there
is a need for everybody, including the
government, to budget and properly allocate
the use of whatever resources are available.
It will help one understand how to make more
rational decisions in spending money, saving
part of it, and even investing it.
On the national level, economics will enable
you to look on how the economy operate, and
if leaders are effective in trying to shape up
the economy.
Let’s have a group
activity!
The Basic Economic Problems of Society
The Basic Economic Problems of Society
The Basic Economic Problems of Society