APPLIED ECONOMICS PREPARED BY:

12 NHERIZA S. RAMORAN
 IMPORTANCE OF ECONOMICS
Man is always faced with choices.
He has to decide on goods and services that give maximum
utility to satisfy his needs and wants with the limited resource that
he has.
Help societies, including government to budget and properly
allocate whatever resources available and make rational decisions
in spending money, saving money , or investing money.
Decide whether officials and leaders are effectively shaping the
economy and formulating policies for the good of the nation.
WHAT IS ECONOMICS?
is the social science that involves the use of scarce
resources to satisfy unlimited human wants and needs.
From the Greek words “OIKOS”, meaning household
and “NOMOS” meaning management.
Study of production, distribution, selling and use of
goods and services
SCARCITY
Reason why people have to practice economics
Insufficiency of resources to meet the wants of
consumers and insufficiency of resources for producers
that hamper enough production of goods and services.
TYPES OF SCARCITY
A. RELATIVE SCARCITY- when a good is scarce
compared to its demand
Ex. banana
B. ABSOLUTE SCARCITY – when supply is limited
Ex. Oil, cherries
DEFINITION OF TERMS
ECONOMIC RESOURCES-the problem of having unlimited
wants, but limited resources to satisfy them.
NATURAL RESOURCES-came from the nature that are used in
production, including land, raw materials, and natural resources.
CAPITAL RESOURCES- the processed materials , equipment,
and buildings used in production.
HUMAN RESOURCES- the efforts of people involved in
production, including labour and entrepreneurship
NEEDS- the essential of life, such as food and shelter
WANTS – desires for non- essential items
ECONOMICS RESOURCES
1.LAND- soil and natural resources that are found in nature and
not manmade. Owners of lands receive payment known for rent.
2.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.
3.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.
BRANCHES OF ECONOMICS
MACROECONOMICS
MICROECONOMICS
MACROECONOMICS
Is a division of economics that is concerned with the
overall performance of the entire economy.
Focuses on the overall flow of goods and resources and
studies the causes of changes in the aggregate flow of
money.
Nature of economic growth
The expansion of productive capacity and the growth of
national income.
EXAMPLE
The study of the Philippine economy would analyze the
gross national income and total employment.
MICROECONOMICS
Studies the decision and decision and choices of the
individual units and how these decisions affect the prices
of goods in the market.
It also concerned with the process of setting prices of
goods that is also known as PRICE THEORY.
EXAMPLE
Determine the price of rice and how much of it is produce
and sold. It would also look at how regulations and taxes
affect the price and supply of rice.
TYPES OF ECONOMICS
1. HOUSEHOLD
2. BUSINESS
3. NATIONAL
4. INTERNATIONAL
HOUSEHOLD ECONOMICS
The family is the basic example of the application of
economics. It is here that the household manager allocates
the household income to satisfy the needs and wants of
the family member.
BUSINESS ECONOMICS
Employed individuals and groups of people working from
this field. This type usually deals with rents, salaries,
income and others.
NATIONAL ECONOMICS
This deals with the economic factors that influence the
country’s economy as a whole, including control of a
nation’s revenues, spending, wealth, or capital.
INTERNATIONAL ECONOMICS
The highest stage of economic operations and is
concerned with the industry of one country with other
countries such as trade, tourism, and exchange rates .
ECONOMIC AGENTS
Is a person, company, or organization that has an
influence on the economy by producing, buying, or
selling.
CONSUMERS
These refers to the end-users of goods and services that
are individuals, companies of other economic
organizations that purchase goods or services for
consumption. A typical family is an example of
consumers.
PRODUCERS
These are the organizations that produce goods and
services. They may be individual entrepreneurs ( self-
employed) or large multinational companies. A
manufacturing company/ factory is an example of a
producer that purchases raw materials to be converted
into finished products.
GOVERNMENT
This is an entity that overlooks the whole economy
through control and regulation, attempts to maximize the
well being of society by providing social services to its
citizens, through taxation.
MODULE 2: APPLIED
ECONOMICS AND ITS UTILITY
ECONOMIC ISSUES
POVERTY AND UNEQUAL DISTRIBUTION OF INCOME
DEMOGRAPHIC CHANGES AND ITS ECONOMIC
IMPLICATIONS
LOW INVESTMENT IN HUMAN RESOURCE
DEVELOPMENT
PURSUING FOOD SECURITY
SLOW ADOPTION OF MODERN TECHNOLOGY
ECONOMIC SYSTEM
1. TRADITIONAL ECONOMY
2. COMMAND ECONOMY
3. MARKET ECONOMY
4. MIXED ECONOMY
TRADITIONAL ECONOMY
THIS IS TYPE OF ECONOMIC SYSTEM WHERE DECISIONS
ARE BASED ON TRADITIONS AND PRACTICES
PRACTICED OVER THE YEARS AND PASSED ON FROM
GENERATION TO GENERATION.
COMMAND ECONOMY
THIS IS AN AUTHORITATIVE SYSTEM WHEREIN
DECISION MAKING IS CENTRALIZED IN THE
GOVERNMENT OR A PLANNING COMMITTEE. THIS
ECONOMY HOLDS TRUE IN DICTATORIAL, SOCIALIST,
AND COMMUNIST NATIONS.
MARKET ECONOMY
THIS IS THE SYSTEM THAT IS THE MOST
DEMOCRATIC FORM. DECISIONS ON WHAT
GOODS AND SERVICES TO PRODUCE ARE BASED
ON THE FORCES OF DEMAND AND SUPPLY.
MIXED ECONOMY
THIS SYSTEM IS A COMBINATION OF TRADITIONAL
ECONOMY AND MARKET ECONOMY.