APPLIED

ECONOMI
CS
ECONOMICS AS SOCIAL AND APPLIED
SCIENCE
IN TERMS OF NATURE AND SCOPE
Task 1: Let’s check your prior knowledge…
The activity aims to give you a clear understanding of the
reason why people have to practice economics.

Directions: Identify what scarce resource is represented in

each picture. Analyze the supporting sentence of each item and
write MICRO if it belongs to microeconomics and
MACRO if it is macroeconomics. Jumbled word is provided to
guide you identify the scarce
resource asked.
 OOFD
Click icon to add picture MANY PEOPLE ARE NOT ABLE TO
EAT ENOUGH IN A DAY BECAUSE
OF THE LOCKDOWNS DURING
THE PANDEMIC.
OMNYE
PEOPLE ARE HAVING A PROBLEM
ON SAVING MONEY DUE TO
INFLATION OR INCREASE IN THE
PRICE LEVEL OF GOODS AND
SERVICES.
ERTAW
GLOBAL WARMING HAS CAUSED
WATER RESOURCES IN SOME
AREAS TO RUN-SHORT OF.
TNEMPLMEYO
OVERPOPULATION AND
OVERSUPPLY OF THE LABOR
FORCE HAVE CAUSED MANY
PEOPLE TO BE UNEMPLOYED.
NETINRET AESSCC
SOME STUDENTS IN RURAL
AREAS ARE HAVING TROUBLE
DOING THEIR WORK DUE TO
LACK OF INTERNET ACCESS.
LOOHCS SUPPEILS
THERE’S A SHORTAGE OF SCHOOL
SUPPLIES IN THE MARKET OF
SOME REMOTE ISLANDS DUE TO
THE DELAYED DELIVERY FROM
THE SUPPLIERS CAUSED BY
RESTRICTIONS ON
TRANSPORTATION DURING THE
PANDEMIC.
CALMEDI SUPPEILS
MEDICAL PRACTITIONERS DO
NOT HAVE ENOUGH SUPPLIES TO
PROTECT THEMSELVES DURING
THE COVID-19 PANDEMIC.
Task 2: Let’s classify…
Directions: Evaluate the following situations and classify if the
situation considers economics as Social Science or Applied
Science. You will be given a hint of what is meant by social and
applied. Copy the given format in your activity notebook.

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
Task 3. Let’s define…
Based on the activity found in task 2, can you
now define economics as social science and
applied science?
Directions: In the box, identify the sentences
that define Economics as social science and
Economics as applied science. Copy the given
format in your activity notebook.
Task 4: Let’s analyze the flow…
As illustrated below, analyze the circular flow of income from good and
services, and answer the following questions.
WHAT IS
ECONOMICS?
Economics does not teach man how to get
rich, nor does it provide magic formulas as
to what business one should venture into,
how to get a job and what kind of products
he should manufacture. Economics simply
explains why some businesses succeed
while others do not and why a particular
economic event occurs.This learning
module will describe economics as a social
science, its relationship to other sciences.

17
NATURE AND SCOPE
OF ECONOMICS
• Every man of any distinction
makes an economic decision
every day. Deciding on how
much to spend and save, the
kind of food to buy, the type of
school to enroll, the amount of
time for work and leisure, and
may more are only some
situations where one applies
economics. Thus, it is very
important to understand the
various issues and intricacies
concerning economics.
18
ECONOMICS AS DEFINED

From the Greek words OIKOS meaning household

and NOMOS meaning management

= household management

ECONOMICS

The wise production and use of wealth to

meet demands or needs of the people

Figure 1: Economics as defined

19
 ECONOMICS
is a social science that deals
with how individuals organize
themselves in order to
distribute scarce resources to
create products and services
that meet man's infinite and
multiplying desires and needs.
20
ECONOMICS AS A SCIENCE

• It is a science because, in relation to

those general laws and principles, it is
an organized body of facts,
orchestrated, structured and
systematized. (Observation,
hypothesis formulation, knowledge
set, experimentation, inference,
generalization)
• Using some kind of logic based on a
collection of systematic relations,
economic analysis attempts to
describe economic events.
• It is social science since individuals
or societies and their actions,
unpredictable in nature, are the
subject of economics.
•
21
SCOPE OF ECONOMICS

• Microeconomics (from the Greek word

mikros, meaning “small”)
• The behavior of individual markets work.
It focuses on how individual household,
firms and industries make their choices ,
and the interaction of such decisions in
the particular market.
• Macroeconomics (from the Greek word
makros, meaning, “Large”)
• Deals with the problem of the economy as
a whole. It looks at the aggregate prices,
production and income.

22
Microeconomics examines individual economic activity, industries, and their
interaction. It has the following characteristics:
• Elasticity: The ratio of change in the percentage of one variable to another
variable is determined by elasticity. For example, demand elasticity of income,
demand elasticity of price, demand elasticity of supply, and so on.
• Theory of Production: It entails the conversion of inputs into outputs in a cost
effective manner. Packaging, shipping, storage, and manufacturing are only a few
examples.
• Cost of Production: This theory evaluates the object price based on the cost of
resources.
• Monopoly: In this theory, the dominance of a single entity in a certain field is
investigated.
• Oligopoly: It refers to the market domination of tiny businesses.

23
Macroeconomics is a branch of economics that discusses broad aggregates and
their interactions from the top down:

• Growth: It investigates the elements that contribute to economic growth, such

as an increase in a country's output per capita through time.
• Business Cycle: It argues for the central bank and the government to
collaborate in formulating monetary and fiscal policies to track output
throughout the business cycle.
• Unemployment: The unemployment rate is used to calculate it. It is caused by
a number of variables, including pay increases, a shortage of job openings, and
so forth.
• Inflation and Deflation: Inflation refers to an increase in a commodity's
price, whereas deflation refers to a reduction in a commodity's price. These
indicators are useful for assessing the state of a country's economy.
24
EXAMPLES

icon

icon

25
Economics 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.
Simply put, applied economics is the study
of how theories work in the real world. At
either the macroeconomic or microeconomic
levels, the discipline can be applied.
26
WHAT IS THE IMPORTANCE OF
APPLIED ECONOMIC
APPLICATION?

27
1. When economics is applied to a firm, a household, or a
country, it helps to eliminate any attempts to make a situation
appear worse or better than it is.
Applied economics becomes a powerful tool for revealing
the genuine and entire situation so that actions can be taken.
Example:
Applied economics can be used to evaluate a company's
earnings. The findings may aid CEOs in devising tactics to
increase sales.

28
2. Applied economics serves as a framework for determining
what activities can be taken to improve the current economic
condition in a reasonable manner.
• by examining each aspect, it is possible to improve areas
where performance is lacking.
Example:
• Buying and selling products and services
• The utilization of raw materials
• Within the organization, there is a division of labor (e.g.,
firm, company, agency)
29
3. Applied economics may educate you the way to
avoid making costly mistakes.
• to review what steps were taken to improve and
correct situations and continue good strategies to keep
the economy flowing in a correct direction.

30
Applying economic theory in our lives means to
handle actual economic issues and be able to do
something about it. The concept of scarcity and
selection should encourage us as individuals to
assist in our own way to provide solutions to the
country’s economic problems.

31
THANK YOU !