APPLIED ECONOMICS –

Grade 12
Alternative Delivery
Mode
Quarter 1 – Module 1:
Economics as a Social
Science
and Applied Science in
Terms of Nature and
Scope
First Edition, 2020
Republic Act 8293,
section 176 states that:
No copyright shall
subsist in any
work of the Government
of the Philippines.
However, prior approval
of the government
agency or office wherein
the work is created shall
be necessary for
exploitation of such
work for profit. Such
agency or office may,
among other things,
impose as a condition
the payment of royalties.
 Borrowed materials
(i.e., songs, stories,
poems, pictures, photos,
brand names,
trademarks, etc.) included
in this module are owned
by their respective
copyright holders. Every
effort has been exerted
to locate and seek
permission to use these
materials from their
respective copyright
owners. The publisher and
authors do not represent
nor claim ownership
over them.
Published by the
Department of Education
Secretary: Leonor Magtolis
Briones
Undersecretary: Diosdado
M. San Antonio

Printed in the Philippines by

________________________
Department of Education –
National Capital Region
Office Address:
____________________________
________________
____________________________
________________
Telefax:
____________________________
________________
E-mail Address:
____________________________
________________

Development Team of the

Module
Writers: Ellaine I. Dela
Cruz, DBA Manuel L.
Hermosa, EdD
Isabel A. Gumaru, DBA
Ma. Cristina A. Labay, MM
Farida F. Tallud, DBM
Jupiter Q. Whiteside, MBA
Clarabelle V. Dalimit, DEM
Mark Vincent B. Emit, PhD
Edna B. Waje, DEM
Momerto T. Goneda MSIT
Editors: Remylinda T.
Soriano, EPS
Angelita Z. Modesto,
PSDS
 Teofilo R. Norombaba,
PSDS
George B. Borromeo, PSDS
Illustrators: Writers
Layout Artist: Ellaine I. Dela
Cruz
Management Team :
Malcolm S. Garma, Regional
Director Name of Regional
Director
Genia V. Santos,
CLMD Chief Name of CLMD
Chief
Dennis M. Mendoza,
Regional EPS In Charge of
LRMS
Maria Magdalena M. Lim,
CESO V, Schools Division
Superintendent
Aida H. Rondilla, CID Chief
Lucky S. Carpio, EPS In
Charge of LRMS
Division ADM Coordinator
Name of Division ADM
Coordinator
APPLIED ECONOMICS –
Grade 12
Alternative Delivery
Mode
Quarter 1 – Module 1:
Economics as a Social
Science
and Applied Science in
Terms of Nature and
Scope
First Edition, 2020
Republic Act 8293,
section 176 states that:
No copyright shall
subsist in any
work of the Government
of the Philippines.
However, prior approval
of the government
agency or office wherein
the work is created shall
be necessary for
exploitation of such
work for profit. Such
agency or office may,
among other things,
impose as a condition
the payment of royalties.
Borrowed materials
(i.e., songs, stories,
poems, pictures, photos,
brand names,
trademarks, etc.) included
in this module are owned
by their respective
copyright holders. Every
effort has been exerted
to locate and seek
permission to use these
materials from their
respective copyright
owners. The publisher and
authors do not represent
nor claim ownership
over them.
Published by the
Department of Education
Secretary: Leonor Magtolis
Briones
Undersecretary: Diosdado
M. San Antonio
Printed in the Philippines by
________________________
Department of Education –
National Capital Region
Office Address:
____________________________
________________
____________________________
________________
Telefax:
____________________________
________________
E-mail Address:
____________________________
________________
Development Team of the
Module
Writers: Ellaine I. Dela
Cruz, DBA Manuel L.
Hermosa, EdD
Isabel A. Gumaru, DBA
Ma. Cristina A. Labay, MM
Farida F. Tallud, DBM
Jupiter Q. Whiteside, MBA
Clarabelle V. Dalimit, DEM
Mark Vincent B. Emit, PhD
Edna B. Waje, DEM
Momerto T. Goneda MSIT
Editors: Remylinda T.
Soriano, EPS
Angelita Z. Modesto,
PSDS
Teofilo R. Norombaba,
PSDS
George B. Borromeo, PSDS
Illustrators: Writers
Layout Artist: Ellaine I. Dela
Cruz
Management Team :
Malcolm S. Garma, Regional
Director Name of Regional
Director
 Genia V. Santos,
CLMD Chief Name of CLMD
Chief
Dennis M. Mendoza,
Regional EPS In Charge of
LRMS
Maria Magdalena M. Lim,
CESO V, Schools Division
Superintendent
Aida H. Rondilla, CID Chief
Lucky S. Carpio, EPS In
Charge of LRMS
Division ADM Coordinator
Name of Division ADM
Coordinator
First module: applied economics

https://www.studocu.com/ph/document/university-of-cagayan-valley/economics/abm-applied-
economics-12-q1-w1-mod1/9229790
In a simple answer, look at the study of economics, supply/demand, efficient
pricing, lowering costs, etc. Now, take those into real world situations and APPLY
the to solve the problems that every business has. The problem anyone dealing
with economics, government, businesses, institutions have. Apply the economic
theories, you will find that life in an office and the classroom can have different
problems. Companies tend to be good at the very big stuff; raw materials,
manufacturing, sales. Even there they can make improvements. But they spend
a lot on transportation, communications, human resources. These things can be
improved upon. Apply what you learned to real life problems and solve them.
Applied Economics focuses on real-world activity. It uses tool that can be
learned by anyone who can read, write, and do simple mathematics.

Theoretical Economics often ignores real-world activity, creates ideas that seem
like they ‘should’ be good, but often do more damage… for example, Socialism
(especially Marxism & Communism) and some forms of ‘capitalism’.

Focus on the processes and cycles found in nature. Ignore abstract theories.

What are the utility and application of applied economics that solve
economic issues and problems?

There are several clear examples in just mechanism design, which is just one area of applied
microeconomics.

Mechanism design, and the related field of auction theory, has a lot of practical applications. It is
used to design the auctions that governments use to sell things like bonds, natural resource rights,
and rights to parts of the wireless spectrum. It was also used to design the system that matches
medical students to residency opportunities (a critical piece of the path to become a doctor). That
system has been mathematically proven to be optimal for students who are not part of a couple,
and it is known that no such system exists for couples. That’s pretty amazing.

Related ideas are used in many areas of public policy.

I will also point out that big tech companies now routinely hire a chief economist and use them
to do various things.

How are economic problems solved?

First find your economic problem.

If you are a human, your problems are to eat, clothe yourself, have a place to lay your head at
night, and so on. You have to work to achieve these things. This may be hard, but is not a
problem. Your best bet is to keep doing today what you did yesterday - and try to do it better.
Tomorrow, the same again. You will die at the end.

An “economic” problem needs first an economist, who will seek to tell you how better to run
your own life. Or who will tell a government how they should best run the country. And he may
even be correct. But not necessarily, and not always, and not for everyone. So there may arise
“problems” because the economist does not know everything, and cannot take account of
everyone’s “best interests” - and probably does not even attempt to. He is usually after some
“aggregate” improvement - to please the government wonks who employ him, as a specialist
wonk, to help “guide” their attempts to make a silk purse out of a sows ear - or some such
“improvement” in “the economy” or at least in the statistics thereof. As in the business world,
it’s all a matter of “the bottom line.”

Economic problems are solved in the same way they are created - by the use of the apprpriate
“smoke and mirrors” - just attend to the figures we publish: they are what have been “counted” -
and that’s what counts. Government statistix.

How can applied economics solve unemployment?

This question seems to beg a response that is limited in scope, to the philosophy of one school of
economic though, or another. I think this is the wrong way to assess any national economic issue.
If we try to hammer all economic issues into the “mold” of Libertarian thinking, or the
constraints of “free market capitalism”, or the Austrian school, or any other economic “school”,
we are bound to failure.

The reason is that none of those economic philosophies are actually a science. They are nothing
but a set of theories, none of which have ever been shown to be either useful or valid in
constructing a viable economy.

Here is the truth. Economics is not “rocket science” it is basic common sense. If we use common
sense to solve our problems, they will be resolved. We get into trouble when we try to use one of
these nonsensical economic models to find solutions. This is because the reasoning behind the
economic thinking is itself faulty, so nothing that comes from implementing it will be effective
either.

For example, how many times do we have to enact tax breaks for the wealthy, before we figure
out that giving the rich more money does nothing but cause deterioration in the economy for
everyone else? It seems obvious to me from the point of common sense, but for over 40 years
now, we have been enacting one tax break after another, each time expecting an explosion of
economic expansion and job creation. It never happens. Time to do something entirely different.

Now, to answer the question of how to deal with unemployment. It’s very simple actually. All
we have to do in the US is emulate the economic models that every other wealthy advanced
nation has followed for decades. We need to adopt economic policies that raise the incomes of
the working class and the poor. They are the people who spend money and it is their spending
that creates demand for goods and services. It is that demand that causes economic expansion
and job creation.

That’s all there is to it.

How can applied economics help solve the poverty?

“The poverty” is not a problem to be solved. It is a condition, to be worked out of. And that is an
economic task. “Applied economics” seems to suggest that you have some body of economic
understanding, let’s just call it “theoretical ecnomics” - and that this can be “applied” by
following the advice of skilled theoreticians, called “economists” - who know things ordinary
people do not.

This is not true. No such programme of the “application” of “economic theory” to a problem of
poverty has ever been known to work. The pretensions of economists should be ignored.

Counter examples please ….?

What is economics as an applied science? How does it address the

economic problem of the country?

The application of economics is judging the effect of actions, such as government policies, on
economic activity.

For instance, economic theory (science) predicts that the quantity sold of something will go
down if the price increases (all else being equal). I suppose you could say that applied economics
is predicting that less will be sold if a new tax pushes the price up; applied economics is
predicting how people will act. Economics does not address economic troubles, it predicts the
effect of actions taken by government to address problems.

Examples abound. I believe it was the New Jersey legislature that decided to raise more revenue
by substantially increasing the tax on sales of commercial trucks. Economic theory predicted that
the new tax would encourage buyers to go to Pennsylvania and New York for trucks rather than
paying the new New Jersey tax. The tax increase would tend to reduce tax revenue, not increase
it. As I recall, the effect of the tax increase was that no commercial trucks were sold in New
Jersey until the increase was repealed. Economic theory predicted that fewer trucks would be
sold in New Jersey but could not predict the exact magnitude, could not predict that zero trucks
would be sold.

Applied economics is like applied physics: if you step out in front of a moving bus physics
predicts you will be hit by the bus. Applied biology predicts you will be injured. Applied
neurology predicts that you will experience pain.
What economic theory is best applied to solve economic problem?

That’s right. Economic problems are mankind's problems, and as such there are as many
solutions as there are philosophies, i.e. religions,capitalism,

Why do we need to study and learn about applied economics?

Greek 'oikonomia' means a household. The English word means management, as in the class
"Home Economy". Since management always boils down to pinching pennies, the word comes
to mean frugality. But it still means management.

Did you buy something today? Let's suppose you bought a pencil. Which one? Did you look for
a brand, or a color, or just grab one displayed near the checkout line? Whatever your decision
was, you cast a vote for that exact detail, voting with your money. All the buying decisions in an
area make up the economy of that area.

Economics and politics are intimately related, but the one is not the other and you should
carefully avoid confusing them. The USA demonstrated such a confusion recently. Congress got
the idea to "stimulate the economy" by giving people money to buy new cars if they would crush
the old ones. Pretty soon people noticed that most of that money was leaving the country as
people bought imported cars, and prices of used car parts were skyrocketing. It never occurred to
the politicians that not all cars are made in USA, and used cars are the only source of used car
parts. In class work that is called "broken window fallacy". Here is a long discussion of the
subject:

In what way is applied economics important in tackling economic

issues and problems of the country?

You cannot “apply” economics. Economics is not a salve, or ointment, or potion, that can be
rubbed on, or swallowed. It is a body of opinions about how “things” happen - many quite crazy.
It is a set of theories about what are the “issues” which need to be tackled - but tackling an issue
is just fancy economist-speak for doing something real in the world.

If you have a problem in the country - an earthquake ? A tornado ? Crime ? Poverty ? Obesity ?
then go and try to make things better. Dig the survivors out of the rubble. Turn off the leaking
gas pipes: put out the fires. A tornado ? Take cover. Then come out and help clear up the
wreckage. Crime ? Don’t do it. Help the police. Carry. Lock your doors. Poverty ? Fight the
minimum wage. Help where you can. Obesity ? Eat less ? Eat better ? Eat at home ? Learn to
cook ?
I just tried to run through a few random “issues.” The only “economics” that cropped up were in
my advice to stop trying to put in “minimum wages” (or rent controls, for that matter) because
these are bad economic theories that are counterproductive, and mostly harm the people they are
said to help. But people never learn.

The economic problem is essentially an individual one. A person has resources

to buy goods and services. His economic problem is as follows: if he values good
“A” over good “B” but doesn’t have enough money to buy both “A” and “B,” the
solution to his economic problem is for him to buy good “A” instead of good “B”.
In this way, the person is allocating his scarce resources (labor, income, and the
like) to achieve his most important wants or goals.

When we look at this economic problem from the standpoint of society, we have
the economic problem facing society, which is the definition of economics: using
scarce resources to satisfy unlimited wants. The individual maximizes his
satisfactions, and society maximizes its resources.

Any problem in an economic process that distort the economy is an economic

problem. Distorts means sending the economy to instability and dislocation of
citizens expectations and feeling of safety and stability.

For example, the advertisement where it is written in microscopic letters

‘conditions apply’ and the consumer walks in without knowing or seeing this and
when he reaches there they show him a product and give him all the good sides
of it and masquerading the risks involved of durability, service costs and so on.
This is called “bait and switch”, which can cause distress and money loss to
consumer, which nowadays are regulated in foreign developed world, so that
wealth erosion and distortion of economies there don’t sprout from such
activities happening at high frequencies.