Differentiate economics as social

science and applied science in terms

of nature and scope
 Economics
- defined as the social science that deals with
the production, distribution, and consumption of
goods and services.
 Economics is a branch of social science
concerned with the use of limited resources
to meet boundless desires (Rabanal, 2018).
The desire to have as many goods and
services as possible is a part of human
behavior.

Consumer's salary and purchasing power,

however, limit their ability to purchase
goods and services.
 Natural economy
-refers to a type of economy in which money is not used
in the transfer of resources among people. It is a system
of allocating resources through direct bartering,
entitlement by law, or sharing out according to
traditional custom.
Social – explain how a particular social group
or socioeconomic class behaves within
a society, including their actions as
consumers.
Applied - application of economic theory to
determine the likely outcomes associated
with various possible courses of action in the
real world
 Social Economic
• Motorists complain of high gasoline prices
• People have no freedom of choice in arriving
at decisions on what to buy
• People always complain about having not
enough -- not having enough money to pay
one’s debts, not enough food on the table,
not enough income to meet all the family’s
needs.
 Applied Economic
• Economics students analyze how to maximize the
use of available resources to overcome scarcity
• Philippine congress passed the Value Added Tax
Law to strengthen the Philippine tax system
• Business understands Laws of supply and
demand by combining past sales data and
marketing research regarding their target
market and production decisions
Economic as an Applied Science

Applied Economics as opposed to economic

theory, is the study of economics in real-
world settings. It is the application of economic
ideas and theories to real-world circumstances
with the goal of predicting the results.
 Microeconomics
-It deals with the functioning of individual
industries and the behaviour of individual
economic decision-making units such as firms
and household.
 Microeconomics
FAMILY BUDGET INDIVIDUAL MARKET
LOCAL ALLOCATION OF FUNDS
LOCAL BUSINESS
 Macroeconomics
-It looks at the economy as a whole and
examines the factors that determine national
output or product.
 Macroeconomics
GROSS DOMESTIC PRODUCT
WHOLE ECONOMY
RATE OF INFLATION
RATE OF UNEMPLOYMENT
FOREIGN EXCHANGE RATE
I. Classify the following topics. Write MIC if it falls under Microeconomics;
MAC if it falls
under Macroeconomics.

_______1. The inflation rate in the Philippines in the last quarter of 2019
was 4.8%.
_______2. A P340-billion deficit in the Philippine budget is expected in
the year 2021.
_______3. Prices of Tire Less vehicles are predicted rise up in December.
_______4. Garlic prices in the past months have risen because producers
hoarded their
supplies in their bodega.
_______5. The unemployment rate has dropped because of the increase
in the number of OFWs.
5. The unemployment rate has dropped because of the
increase in the number of OFWs.
_______6. In the past year, Soda Cola was named the
fastest-selling product within the market.
_______7. Land owners could not increase their rental on
land, because of the Rent Control Law.
_______8. Prices of apples and grapes tend to rise up
during the Christmas season.
_______9. The Philippine economy grew at the rate of
5.8% in 2019.
_______10. Philippine congress passed the Value Added
Tax Law to strengthen the Philippine tax system.
IYTRCASC
 Scarcity
-is a situation wherein the
amount of something
available is insufficient to
satisfy the desire for it.
POCIDRNTUO
 Production
-the process of combining
inputs in order to make
something for consumption.
It is the act of creating output.
EERROSCSU
 Resources
-labor, capital, land, and
entrepreneurship that are used to
produce goods and services also
known as factors of production.
OTPUUT
 Output
-a good or service which has
value and contributes to the
utility of individuals
TBRIOUNTSIDI
 Distribution
-the allocation of the total
product among members
of society.
UIMOPTSONCN
 Consumption
-the use of a good or service
 Methods of Economics
Positive Economics : focuses on causes and effects,
behavioural relationships, and facts involved in the
evolution and development of economic theories. Often
called “what is” economics

For example- rise in prices of crude oil leads to increase in

demand for bicycles.

-When government levies more taxes on tobacco, people

started smoking less.
 Methods of Economics

Descriptive Economics : the compilation of data that

describe phenomena and facts

Economic Theory: set of related statements about cause

and effect.
 Activity #2
On 1 sheet of yellow paper, explain each of the following
in not less than 2 sentences.
1. Differentiate “Macroeconomics” and “Microeconomics”

2. Explain your understanding about “Economics”