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Introduction To Applied Economics Ii

This document provides an introduction to applied economics. It discusses economics as both a social science and applied science, focusing on observing how economic theories work in practice. Applied economics is important as it can [1] assess true economic situations, [2] determine steps to improve performance, and [3] teach lessons to avoid negative outcomes or minimize impacts. Econometrics applies statistical and mathematical theories to economics for testing hypotheses and forecasting trends. The document also outlines basic economic problems such as scarcity, production questions, distribution, resource utilization, and economic growth.

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59 views24 pages

Introduction To Applied Economics Ii

This document provides an introduction to applied economics. It discusses economics as both a social science and applied science, focusing on observing how economic theories work in practice. Applied economics is important as it can [1] assess true economic situations, [2] determine steps to improve performance, and [3] teach lessons to avoid negative outcomes or minimize impacts. Econometrics applies statistical and mathematical theories to economics for testing hypotheses and forecasting trends. The document also outlines basic economic problems such as scarcity, production questions, distribution, resource utilization, and economic growth.

Uploaded by

via gepila
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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INTRODUCTION TO

APPLIED ECONOMICS II
ECONOMICS AS SOCIAL SCIENCE
• It is a field of discipline whose one among prime areas of concern is

focused on scientific and systematic understanding of


social interactions of people in the society as they reciprocally
or communally strive to attain their common goals for a prosperous

living condition, peace environment and sustainable


economic growth and development
ECONOMICS AS APPLIED SCIENCE

is the study of economics in relation to real

world situations. It is the application of

economic principles and theories to real

situations, and trying to predict what the

outcomes might be.


...simpler definition

It is the study of observing


how theories work in
practice.
WHAT IS THE IMPORTANCE OF APPLIED
ECONOMIC APPLICATION?
1. Applying economics to a company, household or a
country helps sweep aside all attempts to dress
up a situation so that it will appear worse or
better than it actually is.

*applied economics becomes a powerful tool to


reveal the true and complete situation in order
to come up with things to do
EXAMPLE

Applied economics can assess the profits of a certain


company.

The result can help the executives to do some


strategies
in order to boost its sales
WHAT IS THE IMPORTANCE OF APPLIED
ECONOMIC APPLICATION?

2. Applied economics acts as a mechanism to


determine what steps can reasonably be
taken to improve current economic situation

*to examine each aspect, one can strengthen


areas where performance is weak
EXAMPLE

• Purchase of goods and services

• Usage of raw materials

• Division of labor within entity (e.g. firm,


company, agency)
WHAT IS THE IMPORTANCE OF APPLIED
ECONOMIC APPLICATION?

3. Applied economics can teach valuable lessons on how to


avoid the recurrence of a negative situation, or at least
minimize the impact.

*to review what steps were taken to improve and


correct similar situations and continue good strategies to keep
the economy flowing in a correct direction
WHAT IS ECONOMETRICS?

Econometrics – is the application of statistical and


mathematical theories to economics for the purpose of:

• Testing hypotheses

• Forecasting future trends

The results of econometric are compared and contrasted


against real life examples.
ECONOMETRICS EXAMPLE

Real life application of econometrics


would be to study the hypothesis that
as a person’s income increases,
spending increases.
BASIC ECONOMIC PROBLEMS
• Scarcity of means for satisfying various needs is the
central problem of our economic life and it is
scarcity that creates the need to make a choice

• Scarcity and choice go hand in hand


SCARCITY

Scarcity- refers to the tension


between our limited resources
and our unlimited wants and
needs
1. What to produce?

- The system must determine the desires of the people.


- Goods and services must be based on the needs of the
consumers
Factors to consider:
a. Availability of resources
b. Physical environment
c. Customs and traditions of people
2. How to produce?

- The system must select the proper combination


of economic resources in producing the right
amount of output
- The quality of output must comes first
before the quantity
3. For whom shall the goods and services be
produced?

- This has something to do with distribution

- Once the goods are produced, how shall


they be distributed?
4. Are the country’s resources being utilized or
some of them are lying idle and unemployed?

- When resources are scarce, it is absolutely not


right to keep some of the available ones idle.

- If resources are not fully utilized, the production


system is said to be inefficient
5. Is the economy’s capacity to produce goods
growing or remaining the same overtime?

- To achieve a growth is productive


capacity is a universal objective.

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