FIXED ME I AM

CRUMBLED
1. SEIPRENRTE
2. ANDL
3. RBOLA
4. APITLCA
5. ECOSEURRS
 CHAPTER 1:
Introduction to
Applied Economics
LEARNING OBJECTIVES:
1. Identify basic economic problems of the country
2. Discuss the economic problems affecting the economic
stability of the country
3. Analyze and explain the root cause of the economic
problems of the country
Lesson 1.1 - Revisiting Economics
as a social science.
Specific Objectives:
1. Define Economics
2. Determine the importance of economics
3. Describe the nature of economics
What is ECONOMICS?
 as a study, is the social science that involves the use
of scarce resources, or constitutes rational human
behavior in the endeavor to fulfill/satisfy unlimited
needs and wants
 Understanding how society allocates its scarse
resources
 Almost always, human activities involve economics
ECONOMICS defined: Perspective
 is the science of choice. It studies how people
choose to use scarse resources to produce various
commodities - William Nordhaus

 is the proper allocation and efficient use of

available resources for the maximum satisfaction of
human wants - Fajardo
ECONOMICS defined: Perspective
 branch of knowledge that deals with production,
distribution and consumption of goods and services
- Webster
 the study of mankind in the ordinary business life. It
examines part of the individual and social action
that is most connected with the attainment and use
of material requisites of well-being
- Alfred Marshall
Economics in a process

Unlimited Make
wants Scarcity choices
Definition of terms:
SCARCITY
- the limited nature of resources, which underlies the
basic economic problem
- the condition where there areinsufficient resources to
satisfy all the needs and wants of a population
- the reason why people have to practice economics.
KINDS OF SCARCITY:
a) Relative Scarcity - is when a good is scarce
compared to its demand
b) Absolute Scarcity - is when supply is limited
Nature of Resources:
1. Economic Resources
- the problem of having unlimited wants, but limited
resources to satisfy them
2. Natural Resources
- came from nature that are used in production, including
land, raw materials, and natural process
3. Capital Resources
- the processed materials, equipment, and buildings used
in production
4. Human Resources
- the efforts of people involved in production, including
labour and entrpreneurship

NEEDS
- the essentials of life, such as food and shelter

WANTS
- desires for non-essential items
CHOICE and DECISION-MAKING:

 - Because of the presence of scarcity, there is a

need for amn to make decisions in choosing
how to maximize the use of the scarce resources
to satisfy as many wants as possible
Economic activities:
 Earning money
 Buying goods and services
 Depositing and withdrawing money in bank
Economic from “Oikanomia”
Leshem, 2016:
Greek word Household
 Oikos - house Management
 Nemein - manage
Human Geography
Economics
Linguistics
Sociology
Psychology
Criminology Law
SCIENC because it deals
Physical Science
Anthropology
Development Studies
ESOCIAL with the study of
human’s life and how
Cultural Studies

SSCIEN he lives with other

men
CE
ECONOMICS
Macroeconomics:
 Deals with the economic behavior of the whole
economy or its aggregates (composed of individual
units)
Macroeconomics:
 Discusses the following -
• Gross National Product (GNP)
• Level of employment
• National income
• General level of prices

“EMPLOYMENT
AND
INCOME
GNP
- the total value of goods produced and
services provided by a country during one
year, equal to the gross domestic product
plus the net income from foreign
investment
Microeconomics:
 Deals with the econom behavior of individual units
such as:
- Consumers
- Firms
- Landowners
Macroeconomics:
 Discusses the following -
• Price of rice
• Number of workers in a certain firm
• Income of “ -----”
• Expenditures of PLDT

“PRICE
THEORY”
 Production
Pub
FIn lic tio n
anc u
e Divisions Dis t rib
of
Economics
i on Exc
pt
um han
n s ge
Co
1. Production
- refers to the process of producing or creating
goods needed by the households to satisfy their
needs
Factors of production - inputs
Goods and services - outputs
 ENTREPRENEURSHIP

LABOUR

CAPITAL

LAND
Goods and Services

something that can be

used or consumed
Goods and Services

something that can be

an action
used that someone
or consumed
does to help others
2. Distribution
- refers to the marketing of goods and services
to different economic outlets

3. Exchange
- refers to the process of transferring goods and
services to a person in return for something
present medium of exchange - money
4. Consumption
- refers to the proper utilization of economic
goods. However, goods and services could not
be utilized unless you pay for it. Hence,
consumption could also be spending money
for goods and services
5. Public Finance
- pertains to the activities of the government
regarding taxation, borrowings and
expenditures. It deals with the efficicnet use
and fair distribution of public resources
ECONOMIC RESOURCES
- Factors of production or inputs

Land Labor Foreign exchange

Entrepreneurs Capital
1. Land
- These resources consist of fr gifts of nature
which includes:
 soil, rivers, lakes, oceans, forests,
mountains,
mineral resources
- is considered an economic resource because it has
a price attached to it. “We usually pay for it
through rent or lease”
Land is a limited resource. Physical land
is a fixed resource
2. Labor
- also called “human resources”
- refers to all human efforts, be it mental (writers,
etc), manual/physical (construction workers,
machine operators, etc) or professionals (nurses,
lawyers, doctors, etc) , that
help to produce satisfying
goods and services.
In return, he erans an income
in forms of wages or salaries.
Labor...
- is a flexible factor of production
workers can be allocated
different areas of the
economy for producing
goods and services.
3. Capital
a) can represent the monetary resources
use to purchase natural resource
Ex: companies use capital to buy
land and other goods
b) represents the mor physical assets, individuals
and companies use when producing
goods and services
Ex: buildings, vehicles, equipments
Income derivedrom capital is interest
4. Entrepreneurs
- French word which means “enterpriser”
- organizer and coordinator of other factors of
production: land, labor and capital
He uses his initiative, talent and
resourcefulness to create
economic goods
5. Foreign Exchange
- refers to the dollar and dollar reserves that the
economy has.
- is part of economic resources
because we need foreign
currency for international
trading and buying materials
from other countries.
International medium - dollar
LET’S TEST
OURSELVES
!
1. Economics is derived from the Greek word
“oikanomia” meaning:
a. Economic management

b. Household management

c. Social management
2. Economics is a social science because it deals
with:
a. Human nature

b. Natural resources

c. Experimentation
3. Scarcity of resources means:
a. minimum resources

b. excess resources

c. shortage of resources

d. no resources
4. These are examples of human wants except:
a. smartphone

b. perfume

c. watch

d. clothing
5. Give your definition of economics
Identify what type of economics
(MACRO or MICRO) discusses the ff:

1. Gross National Product

2. Price of bananas
3. Profits of Bread and Butter
4. Employment