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Applied Economics

This document provides an introduction to applied economics. It discusses key economic concepts like scarcity, opportunity cost, and economic resources. It also covers the basic economic problems faced by societies in determining what to produce, how to produce it, and who to produce for. Finally, it briefly outlines the three main economic systems - traditional, command, and market economies.

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Tongierlyn Corda
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38 views29 pages

Applied Economics

This document provides an introduction to applied economics. It discusses key economic concepts like scarcity, opportunity cost, and economic resources. It also covers the basic economic problems faced by societies in determining what to produce, how to produce it, and who to produce for. Finally, it briefly outlines the three main economic systems - traditional, command, and market economies.

Uploaded by

Tongierlyn Corda
Copyright
© © 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
PREPARED BY: TONGIERLYN D.
CORDA
WHAT IS ECONOMICS?
■ Is a social science concerned with using scarce
resources to obtain the maximum of the unlimited
wants of society.
■ Is the study of how societies use scarce resources to
produce commodities and distribute them among
different people
■ Is the study of production, distribution, selling and
use of goods and services
■ Is the study of how people use their limited
resources to try to satisfy unlimited wants.
Learning
Objectives
1. Identify basic economics 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
■ Scarcity - the limited nature of which
resources, underlies the basic economic
problem
■ Economic Resources - the problem of having
unlimited wants, but limited resources to satisfy them
■ Natural Resources – came from nature that are
used in production, including land, raw materials,
and natural process
■ Capital Resources - the processed
materials, equipment, and buildings used in
production
■ Human Resources - the efforts of
people involved in production, including
labour and entrepreneurship
■ Needs - the essentials of life, such as food
and shelter
■ Wants - desires for non-essential items
Scarcity
■ Is a condition where there are
insufficient resources to satisfy all the
needs and wants of a population.
■Scarcity is the reason why people
have to practice economics.
Economics, as a study, is the social
science that involves the use of
scarce resources to satisfy
unlimited wants
Alfred Marshall described economics as
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.
Relative Scarcity-Is when a good
is scarce compared to its
demand.

Absolute Scarcity- is when


supply is limited.
Choice and decision making
■ Because of the presence of scarcity, there
is a need for man 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 the value of the best foregone


alternative.
Economic resources

■Land
■Labor
■Capital
Land

■ Soil and natural resources that are


found in nature and are not manmade.
Owners of lands receive payment
known for 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.
capital

■ Man-made resources used in the production of


goods and services which include machineries
and equipment. The owner of capital earns an
income called interest.
Economic as social science

■ As a social science, economics studies how


individuals make choices in allocating
scarce resources to satisfy their unlimited
wants
2 branches of economics

■ Macroeconomics
■ Microeconomics
■ Macroeconomics is a division of
economics that is concerned with the
overall performance of the entire
economy.
Microeconomics
■ Studies the decision and choices of the
individual units and how these decisions
affect the prices of goods in the
market.
■ It also concerned with the process of
setting prices of goods that is also known
as Price Theory.
Basic economic problems of society

■What to produce and how much?


■How to produce?
■For whom to produce?
What to produce and how much?
■ Society must have to decide what goods and
services should be produced in the economy.
Having decided on the nature of goods that
will be produced, the quantity of these goods
should also decided on.
How to produce
■ Is a question on the production method
that will be used to produced the
goods and services. This refers to the
resource mix and technology that will
be applied in production.
For whom to produce
■ Is about the market for goods. For whom
will the goods and services be
produced? The young or old, the male
or female market, the low-income or
the high income groups?
Economic systems

■ Traditional economy
■ Command economy
■ Market economy
Traditional economy
■ Decisions are based on traditions and
practices upheld over the years and passed
on from generation to generation.
Methods are stagnant and therefore not
progressive.
Command economy
■ This is the authoritative system wherein
decision-making is centralized in the
government or a planning committee. Decision
are imposed on the people who do not have a
say in what goods are to be produced. This
economy holds true in dictatorial, socialist, and
communist nations.
Market economy
■ This is the most democratic form of economic
system. Based on the workings of demand and
supply, decisions are made on what goods and
services to produce.. People preferences are
reflected in the prices they are willing to pay in
the market and therefore the basis of the
producers decisions on what goods to produce.

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