SUBJECT: APPLIED ECONOMICS

SUBJECT TEACHER: MS. JANE M. CARANGUIAN

1.Gumamit ng tamang kasuotan.
2.Open cam hanggat maaari.
3.Iwasan ang mag ingay.
4. Mga tanong pagkatapos ng
discussion.
5.Mangyari lamang na magtanong sa
araw at oras ng nakatakdang
schedule.
6.Kung may nakalimutang tanong sa
araw ng schedule ay maaaring
gamitin ang ating GC, iwasan ang
mag PM.
Motivational quote:
APPLIED
ECONOMICS
A B M S P E C I A L I Z
EThisD course
S UdealsBwith the
J basic
E Cprinciples
T of applied economics,
and its application to contemporary economic issues facing the
Filipino entrepreneur such as prices of commodities, minimum
wage, rent, and taxes.

It covers an analysis of industries for identification of potential

business opportunities. The main output of the course is the
preparation of a socioeconomic impact study of a business venture.
Introduction to Applied
Economics

Lesson 1 Introduction to Economics

Lesson 2 Economics as an Applied
Science

At the end of the session the learners will be able to:

a. Differentiate Economics as a Social Science and as an Applied Science
b. Give real-life situation in which the Principles of Applied Economics are used.
c. Cite current economic issues that needs to be addressed.
d. Relate the Principles of Applied Economics to current issues using critical
thinking.
La nd
Labor Ca pital
LIMITED UNLIMITED Food
Clothing

RESOUR HUMAN
Entrepreneurship Shelter
Security,
etc.
CES WANTS

Relative Scarcity
Scarcity Absolute

Insufficiency of resources to meet the

wants of consumers and
insufficiency of resources for
producers that hamper enough
production of goods and services. Opportunity Cost Choices & Decision-
making
Because of scarcity, there is a need
for a ma to make decisions in
choosing how to maximize the use
of the scarce resources to satisfy
as many wants as possible.
ECONOMIC LIMITE UNLIMITED
D HUMAN
S
Economics is the social science that involves
the use of scarce resources to satisfy
unlimited wants.
RESOURC WANTS
ES
Economics is a social science because it
studies human just like
behavior Psychology and
Sociology.

Social Science
The study of society and how people behave
and influence the world around them. Scarcity

Economics as a Social
Science
As a Social Science, Economics studies how
individuals make choices in allocating
scarce resources to satisfy their unlimited
Choices & Decision-
wants. making
BRANCHES OF
ECONOMICS
Macroeconomics Microeconomics
A division of Economics that is concerned Is concerned with the behavior of individual
with the overall performance of the entire entities such as the consumer, the producer,
company. and the resource owner.

It studies economic system as a whole rather It is more concerned on how foods flow from
than the individual economic units that make the business firm to the consumer and how
up the economy. resources move from the resource owner to
the business firm.
MACROECONOMICS is about the nature of
economic growth, the expansion of It is also concerned with the process of
capacity and the setting prices of goods that is also known
productive
national income. growth of as PRICE THEORY.

MICROECONOMICS studies the decision and

choices of the individual units and how these
decisions affects the prices of goods in the
market.
SCARCITY
Is a condition where there are insufficient
resources to satisfy all the need and wants of
a population.

Relative Scarcity Absolute Scarcity

Is when a goods is scarce compared to its Is when supply is limited.
demand.

RELATIVE SCARCITY occurs not because the ABSOLUTE SCARCITY explains why there are
good is scarce per se and is difficult to some products that are very expensive in the
obtain but because of the circumstances that Philippines.
surround the availability of the good.
CHOICE AND DECISION
MAKING
With the presence of scarcity, there is a need
to make decisions in choosing how to
maximize the use of the scarce resources to
satisfy as many wants as possible.

Opportunity
Cost
Refers to
alternative.
the value of the
bes
forgon
e
t
The concept of OPPORTUNITY COST holds
true for individuals, businesses, and even a
society. In making a choice, trade-offs are
involved.

What will happen if there is

no SCARCITY?
Without scarcity, a person does not need to
make choices since he/she can have
everything he/she wants.
CHOICE AND DECISION
MAKING
With the presence of scarcity, there is a need
to make decisions in choosing how to
maximize the use of the scarce resources to
satisfy as many wants as possible.

Opportunity
Cost
Refers to
alternative.
the value of the
bes
forgon
e
t
The concept of OPPORTUNITY COST holds
true for individuals, businesses, and even a
society. In making a choice, trade-offs are
involved.

What will happen if there is

no SCARCITY?
Without scarcity, a person does not need to
make choices since he/she can have
everything he/she wants.
BASIC ECONOMIC PROBLEMS OF THE
SOCIETY
All societies are faced with basic questions
in the economy that have to be answered in
LIMITE
otordceorpe with constraints UNLIMITED
and limitations. D HUMAN
What to produce? RESOURC WANTS
How
societymuch?
services
must decide what goods
should be produced in
and
the ES
economy. Having decided on the nature of
goods that will be produced, the quantity to
these foods should also be decided on.

How to produce? SCARCIT

is a question on the production method that
Y
will be used to produce the goods and
services. This refers to the resource mix and
technology that will be applied in production. CHOICES AND
MAKIN
DECISION
For whom to produce? G
is about the market for the goods. For whom
will the goods and services be produced? What How For
The young or old, the male or female market, to produce? to whom
the low- income or the income groups? And produce? to produce?
How
ECONOMICS
SYSTEMS
The economic system is the means through which
society determines the answers to the basic economic
Traditional
problemsmentioned. Command Economy Command
Economy This is the authoritative system Economy
This the most democratic
atrnaditipornasc tices upheld wherein decision-making is form of economic system.
Decisions
over
years andare pa
based
s s edonon the centralized isn the government or Based on the workings of
generation to generation. from a planning committee, demand and supply,
Methods are stagnant Decisions are imposed on the are made on what goods and
decisions
prograensdsive. there people who do not have a say services to produce. People’s
societies exist in primitive and
foreTraditionoatl pinrowdhuactegdo. oTdhsear preference are reflected in the
backward civilizations. ectonboemy
true in dictatorial, socialist, holds
and prices they are willing to pay in
communist nations. the market and are therefore the
basis of the producer’s
decisions what goods
on produce. to
WHY ECONOMICS IS
IMPORTANT?
Read the front page of the
newspapers or watch the news on
TV.
WHY DOWE NEED TO STUDY ECONOMICS?
ECONOMICS will help the students understand why there is a need for everybody, including
the
government, to budget and properly allocate the use of whatever resources are available.
It will help one understand how to make more rational decisions in spending money, saving
part of it, and even investing some of it.

On the national level, economics will enable the students to take a look on how the economy
operates and to decide for themselves if the government officials and leaders are effective in
trying to shape up the economy and formulate policies for the good of the nation.
MEASURING THE
The heart of economy is production whose value measures both resource input and output of
ECONOMY
people. The interplay of resources and outputs tells how well the economy has performed.

Economic Resources
also known as factors of production, are the resources used to produce goods and services.

Land
Soil and natural resources that are found in nature and are not man-
made. Owners of lands receive a payment known as RENT.

Labor
Physical and human effort exerted in production. It covers manual workers like construction
workers, machine operators, and production workers, as well as professionals like nurses,
lawyers and doctors. The term also includes jeepney drivers, farmers and fisherman The
income received by labors is referred to as WAGE.

Capital
Man-made resources used in production of goods and services, which include machineries
and equipment. The owner of capital earns an income called INTEREST.
GNP vs.
GDP
Gross National Product
Market value of final products, both sold and unsold, produced by the resources of
the economy in a given period.

MARKET VALUE is determined by supply and demand

ECONOMY’S RESOURCES are those belonging to Filipino citizens and corporations.

NOTALL RESOURCES BELONGING TO THE ECONOMY ARE IN THE ECONOMY.

CONVERSELY, NOT ALL RESOURCES IN THE ECONOMY BELONG TO THEECONOMY.

GNP = C + I + G+ (X –
M)
Imports

Exports
Government Expenditures on Goods
and Services
Investments (stocks of values for future
use)
GNP vs.
GDP
Gross Domestic Product
Better indicator of domestic employment opportunities.
Defined as the market value of final products produced within the country.

GDP is net of GNP after deducting NET FACTOR INCOME from

abroad or
by deducting factor income from abroad and adding back FACTOR PAYMENTS to other
countries.

NET FACOR INCOME from abroad is net export of factor service equal to Factor income from
abroad less the factor payments of other countries.

Net Inflow = Inflow - Outflow

- Net Inflow = - Inflow +

Outflow
APPLIED
ECONOMICS
Application of economic theory and
econometrics in specific settings with the
goal of analyzing potential outcomes.

John Neville
Keynes
First to use the phrase “APPLIED
ECONOMICS” to designate the application of
economic theory to the interpretation and
explanation of particular
economic phenomena.

Applied Economics in
Relation to Philippine
Economic Problems
Understanding the existence of scarcity can help Economics students analyze how to maximize
the use of available resources in order to overcome scarcity.

Knowledge of economic theories such as the Law of Supply and Demand can help in analyzing
why prices are high and what the government can do to help bring down prices.
The Philippines Basic Economic
Problems
Non-inclusive Growth despite of Economic
Growth
Millions of Filipinos are claiming they are
experiencing hunger or they still live below
the poverty level.

Unemployment despite of
Improvements
Main problem of the Philippine Economy.

Unemployment Ratein the Philippines:

2nd Quarter of 2015 = Decreased to 6.4 % from

7.0% in the previous

year Philippines Unemployment Rate average

= 8.85% from 1994
 The Philippines Basic Economic Problems
cont.
Poverty
Socio-economic problem.
Poverty incidence of the population registered at
26.4 %, 26.5% in 2009
25.2% in 2012
28.8 in 1st quarter of 2014

Population Growth
Basic economic problem that can be connected to the issue of scarcity.
When population becomes too big, economic resources may no longer be enough to support the growing population.
2010 = 92.3 M
2014 = 100 M – growing by 2%

Philippines – one of the highest population in

Asia. Represents 1.37% of the worlds population.
Class
Activity:
RESEARCH
Download a copy and read the article “What’s in the proposed
2018 national budget?” using the link provided below.

Based on the budget, determine what expenditures are the government’s top priorities,
and then expenditures which are the least priorities.

The debate topic would be “Is it right to prioritize EDUCATION in preparing the National
Budget?”

LINK:
https://www.rappler.com/move-ph/issues/budget-watch/145988-proposed-2017-national-
budget
Thank
You!
Reference(s):
Dinio and Villasis 2017. Applied Economics. Rex Bookstore First Edition. Pages 2 -14

Rappler
https://www.rappler.com/move-ph/issues/budget-watch/145988-proposed-2017-national-
budget