MODULE 1.

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Applied Economics Learning Module

APPLIED ECONOMICS
Module 1. Lesson 1 and 2

REVISITING ECONOMICS AS A SOCIAL SCIENCE

ECONOMICS AS AN APPLIED SCIENCE

NAME OF THE STUDENT:

GRADE AND SECTION:

PREPARED BY: MS. NEVIRLYN A. SOLIS ,LPT

MODULE 1. REVISITING ECONOMICS AS A SOCIAL SCIENCE
 Applied Economics Learning Module

LESSON 1 Revisiting Economics as a Social Science

Economics as an Applied Science

LEARNING COMPENTENCY:
Differentiate economics as social science and applied science in terms of nature and
scope

PRETEST

A.Directions: Let us check your knowledge to our topic.

Kindly arrange the following words. These are the terms you commonly encounter
when you make decisions of going to the market. Examples of these items are given on
the right column.

1. MIRECOOCNOMSCI ________________________ individuals and industries

2. TENAGILBDSOOG _________________________basic goods/commodities
3. SARCITYC _________________________shortage in supply
4. UXDOOSLUGYR _________________________expensive jewels and gems
5. CDAOTOASAGIP _________________________baking machines

B. Directions: Kindly choose the letter of the correct answer. Encircle your answer.
1. The physical effort of the manpower to produce the protective devices of the frontliners
describes which factor of production?
a. Land b. Capital c. Labor d. Entrepreneur
2. The great ideas, concepts and drive of the production managers to produce something new
describe which factor of production?
a. Land b. Capital c. Labor d. Entrepreneur
3. The computers of the production manager in an office are what kind of goods or products?
a. Consumer goods b. Either consumer goods or capital goods
c. Capital goods d. Economic goods
4. Which best describes economics as a social and an applied science?
a. The study of things we need to survive
b. The study of how people make choices when they are faced with an unlimited supply
of resources
c. The study of human behavior
d. The study of how buyers make choices when there is limited supply of resources
5. Which of the following are examples of human needs?
a. Water and a place to live like houses b. Iced caramel macchiato frappuccino
c. Flat screen televisions d. Laptops and computers

LESSON 1 Revisiting Economic as a Social Science

Economics is a social science that deals with the study of proper

allocation of scarce resources to satisfy unlimited human wants and
needs.There are needs and wants and economics allows allocation of
human and nonhuman resources amog their alternative uses to satisfy
them.
Terms unlocked:
 Social science – the study of society and how the society behaves
Allocation – distribution or an amount or portion of a resource assigned to a particular recipient
Wants – not necessarily require for survival Needs – necessarily
require for survival
APPLIED ECONOMICS simply means APPLICATION of
the economic theories and concepts to determine the likely outcomes
associated with various possible courses of action in the real world.
By better understanding the likely consequences of choices made by
individuals, businesses, and policy makers,we can help them better
choices. https://www.investopedia.com
Adam Smith, the First Economist
Adam Smith is the father of economics. He is an English professor who served as the chief of
Bureau of Customs, England.

ECONOMIC RESOURCES OR FACTORS

In the article of Nowaczyk , J (2020) on Identifying the Factors of Production,he defined
economic resources as the factors of production for goods and services.The factors of production
are inputs combinations in the production of goods and services to make an economic profit for
the firms. These FACTORS OF PRODUCTION are land, labor,capital, and
entrepreneurship. Resources are limited in nature, but human wants and needs are unlimited,
thus, an efficient allocation of these resources or factors of production is a big challenge for
every economy. Economics also helps the entrepreneurs and the economy to allocate resources in
the production of supplies to meet the demands of the consumers.
Land as a Factor of Production--Land – natural resources available to create supply such
as raw materials that comes fromthe ground. It can be a nonrenewable resource; commodities
such as oil and gold; and renewable resource, such as timber.Oil is a natural resource, but
petroleum gas is a capital good. Farmland is a natural resource, but a shopping center is a capital
good.
Labor as a Factor of Production --Labor is the work done by people- education, skills,
and motivation and productivity. Productivity measures how much each hour of worker time
produces in output. Workforce receives wage for his labor.
Capital as a Factor of Production--Capital or capital Goods are capital – the money that
companies used to buy resources; manmade objects like machinery, equipment,and chemicals
that are used in production.For example,capital goods include industrial and commercial
buildings.
Entrepreneurship as a Factor of Production--Entrepreneurship develops an idea into a
business. An entrepreneur combines the other three factors of production to add to supply. The
most successful entrepreneurs are innovative and risk-takers. The income entrepreneurs earn is
profit.
Characteristics of Resources:
1. Scarcity - insufficient resources to supply all the desires and needs of individuals. In the
production of goods and services; there are issues that economics may encounter: these include:
for Land – inadequate land and natural resources; polluted areas; overcrowded spaces; for Labor
– unskilled workforce; mismatch of jobs; for capital – low quality of equipment/machines;
insufficient fund/capital; and for entrepreneurship – Inadequate training of entrepreneurs; limited
opportunity; scarcity of great ideas but many competitors in the market.
2. Multiple use - Resources can have more than one possible use. For example, a plot of land
can be used to plant coffee or to build a factory.
3. Partially replaceable - one resource can replace another in the production of a good or
service (e.g., replace manual labor with technology).
Scarce resources and unlimited desires → Scarcity
Scarcity and alternative uses → Choice

Opportunity Cost
 The discussion of the factors of production and scarcity leads to the concept of the opportunity
cost. Opportunity cost is the thing that is given up when given a choice. Example: NEEDS VS
WANTS (The bread is a need (food)-- the IPOD is a want.

BASIC TERMS TO UNDERSTAND ECONOMICS

TANGIBLE GOODS –material goods or INTANGIBLE GOODS – when they are in the
commodities. form of services. Those rendered by doctors,
engineers, doctors and other professionals.
It is essential that you familiarize yourself with the study of economics. This will facilitate your
understanding of economic analysis. Specifically, you meet GOODS –which yields to your
satisfaction. It is anything used to satisfy your wants and needs.

Goods may also be classified according to use.

CONSUMERS GOODS – goods for the ultimate consumption of the consumers.
Ex.: toothpaste, bath soap, etc.
CAPITAL GOODS or INDUSTRIAL GOODS -used in the production of other goods and
services.Ex.: buildings,machinery,equipment.
ESSENTIAL GOODS- used to satisfy the basic needs of man
Example: foods and medicine.
LUXURYGOODS –goods man may do without, but may give comfort and satisfaction. Ex., perfume,
cakes; chocolates,expensive cars.
ECONOMIC GOODS –goods which are useful and scarce; with value attached to them
and a price has to be paid for their use. If a good is so abundant and it can satisfy
everyone’s needs without anybody paying for it,then, that good is free. The air is free, but
the air from an aircon is an economic good.

Activity No.1 Directions: Listed below are the resources for

production of goods and services. Please list down the economic
issues to each resource of production that may harm the economy.
Choose your answer from the box below.

.
LAND LABOR

RESOURCES OF
PRODUCTION

CAPITAL ENTERPRENEURSHIP

 inadequate land and natural resources; polluted areas; overcrowded spaces

unskilled workforce; mismatch of jobs
low quality of equipment/machines; insufficient fund/capital;
entrepreneurship – inadequate training of entrepreneurs; no new and great ideas
Activity No.2 Directions: Pick all the goods and classify them accordingly. Your mother went to
the market to shop goods for the family. She purchased the following goods. :

Canned goods bread sacks of rice meat vegetables

Toothpaste bath soaps perfumes wrist watch
aircon to ventilate her store coffee maker for her store.

CONSUMER GOOD

INDUSTRIAL GOODS

ESSENTIAL GOODS

LUXURY GOODS

ECONOMIC GOODS

LESSON 2 ECONOMICS AS AN APPLIED SCIENCE

According to Molina, J. A. & Nadal, G. J I (2020), economics is a SOCIAL SCIENCE

concerned with the explanation and prediction of observed phenomena in the society. Economics
studies the way in the societies solve the fundamental problems of reconciling the unlimited
desires of individuals with scarcity of resources, susceptible to numerous alternative uses.
Economics is also an APPLIED SCIENCE because 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. As an applied science, it follows a systematic
procedure to solve issues and problems of the society.

MAIN BRANCHES OF ECONOMICS

 MICROECONOMICS - Study of economic

behavior of individual units of an economy (such as
person, household, firm or industry).
 MACROECONOMICS- Concentrates on the
behavior of entire economies of nation, as a whole.
Microeconomics Macroeconomics

•Studies of markets of goods and services •Studies the economy as a whole

•Focuses of the behavior of individual in the •Focuses on aggregate indicators
market (such as production, employment,
Explains how and why these etc.)
units make economic

METHODS OF ECONOMICS

Positive Statements vs Normative Statements

 Its all about facts Value judgment and opinion
Connects cause and effect Makes recommendation
Ceteris Paribus

‘’All things being equal” All other things being equal”

“Other things held constant” “All else unchanged’’

A. Directions: Please categorize the characteristics of

microeconomics and macroeconomics using the diagram below. These
will enhance your creativity to solve issues in the future.

 Studies the behavior of individual economic units;

 Focuses of the behaviour of individual in the market
 Focuses on parts of the economy: individuals, firms, and industries;
 Studies the economy as a whole
 Focuses on goals like productions standard of living, unemployment, and inflation.
 Policies are focused on monetary policy and fiscal policy.
 Studies of markets of good and services

THE ECONOMY

MICROECONOMICS MACROECONOMICS

B. What I Have Learned

Microeconomics and macroeconomics are two different perspectives on the

economy. The microeconomic perspective 1) studies the behavior of
individual economic units; 2) studies the functioning of markets 3) focuses on parts of
theeconomy: individuals, firms, and industries. The macroeconomic perspective 1) looks atthe
economy as a whole and 2) focusing on goals like productions; standard of living,
unemployment, and inflation. Macroeconomics has two types of policies for pursuing these
goals: monetary policy and fiscal policy.In the production of goods and services; there are
factors that economics may encounter: these include: land – inadequate land and natural
resources; polluted areas;overcrowded spaces; labor – unskilled workforce; mismatch of jobs;
capital - lowquality of equipment/machines; insufficient fund/capital; and entrepreneurship –
inadequate training of entrepreneurs; limited opportunity; scarcity of great ideas butseveral
competitors in the market.

Economics has two fields: micro and macroeconomics.

__________________ study of markets of good and services and focuses
on the
behaviour of individual on products and services in the market
while_________________________ deals with the study of the economy
as a
whole and focuses on aggregate indicators such as _______________;
____________________; ___________________.
The Classification of goods:
__________________;____________________;____________;________
______
There are four factors of production or the resources needed to produce
products and services:
________________;__________________;_______________;_________
_.
Needs and wants are __________________while resources are
_____________.

Assessment (Multiple Choice )

Directions: Choose the letter of the correct answer.
Encircle your answer.

CHECKPOINT!

1. Economics is derived from the Greek word ‘’oikanomia’’ meaning:

a. Economic management b. Household Management
c. Social Management d. Business Management
2. Economics is a social science because it deals with:
a. Human nature b. natural resources
c. experimentation d. management
3. ABM Computer shop purchased additional 10 units of computer for the business.
These goods are called:
a. Consumers goods b. Luxury Goods c. Capital Goods d. Economic Goods
4. Which is not considered as tangible good?
a. Cell phone b. Mask c. Sack of rice d. Training service
5. Which is true about Economics as a social science?
a. Scarce resources and limited needs drive choice
b. Economics explains and predicts economic events
c).The scientific method is based on the normative analysis
d). Economic hypotheses lead directly to predictions
6. Which is true on the value of an economic theory in practice? It is determined by:
a. how accurate the assumptions are.
b. how well the theory can be represented by a graph.
 c. how well the theory can predict or explain. d. how economical the model is.
7. Which of the following is the study of the aggregate economy studied as a whole?
a. Mathematical economics b. Econometrics
c. Macroeconomics d. Microeconomics
8. Business ethics refers to any behavior by businesses that may
a. be illegal. b. violates social or moral standards.
c. result in the maximization of profits. d. All of the above.
9. Businesses have responded to incentives for ethical behavior by doing ALL except
a. lobbying for the abolition of laws that require ethical behavior.
b. appointing “ethics officers” to monitor ethical manners of employees.
c. providing training sessions in ethical behavior for employees.
d. establishing codes of ethical behavior for employees.
10. Which of the following is not an economic agent in your locality?
a. Producer b. Consumer c. Public Sector d. None of ABC

REFERENCES
Articles

Accountancy, Business, and Management Strand, Applied Economics , Phoenix Publishing House Inc. and Patrick
V. Caoile, PhD

Baumol, W. and Allan Blinder, 2016. Macroeconomics: Principles and Policy (13th edition.) Dryden Publishing

Molina, J. A. & Nadal, G. J I (2020) Concept and Scope of Economics. Retrieved on June 01 2020 from
http://personal.unizar.es/jamolina/Unit1.pdf

Nowaczyk, J. (2020 ).Four Factors of Production: Land, Labor, Capital & Entrepreneurship
Retrieved on June o1 2020 from https://study.com/academy/lesson/four-factors-ofproduction-
land-labor-capital-entrepreneurship.html

Pretty, N (2020). Basic terms in Economics. Retrieved on June o1 2020 from

https://www.slideshare.net/nikspretty/basic-terms-in-economic

Websites:

https://global.oup.com/us/companion.websites/9780199811786/student/chapt1/multiplechoice
https://www.thebalance.com/factors-of-production-the-4-types-and-who-owns-them-4045262
https://quizizz.com/admin/quiz/5b7564f0dfd12e00194449b9/factors-of-production
https://study.com/academy/practice/quiz-worksheet-four-factors-of-production.html