Economics as Social

Science and Applied

Science
LESSON 1 QUARTER 1
Objectives
1. Explain the differences between economics as a social
science and as an applied science, focusing on their
nature and scope.
2. Create a mind map or diagram that visually represents the
various branches of economics, including both social science
and applied science perspectives.
3. Demonstrate an appreciation for the practical applications
of economic theories by discussing how these theories can
address real-world social issues.
Economics as
Social Science
and Applied
Science
 Urban Poverty: A photograph
showing a crowded urban street
with rundown buildings, people in
worn-out clothing, and street
vendors. The image might also
include elements like homeless
individuals or children in makeshift
play areas.
 Classroom in Need of Resources: A
classroom setting with minimal
resources, such as outdated
textbooks, broken desks, and a lack
of modern technology. The picture
could show students and a teacher
trying to make the best of the
situation.
 Economic Inequality: An image
contrasting two neighborhoods—
one affluent, with well-maintained
houses and gardens, and the other
struggling, with deteriorating
infrastructure and visible signs of
poverty.
Economics as
a Social
Science
Economics is a science
because it uses
scientific method of
inquiry.
Scientific
method
Observation: Economists begin by
observing real-world economic
behaviors, trends, and data. This can
include studying consumer behavior,
market trends, or macroeconomic
indicators like GDP and inflation rates.
Scientific
method
Hypothesis Formulation: Based on
observations, economists formulate
hypotheses about how certain economic
variables are related. For example, they
might hypothesize that an increase in the
minimum wage will lead to a reduction in
employment.
Scientific
method
Data Collection and Analysis: Economists
collect data to test their hypotheses. This can
involve statistical analysis, surveys,
experiments, or the use of economic models.
They use this data to assess whether their
hypotheses hold true.
Scientific
method
Data Collection and Analysis: Economists
collect data to test their hypotheses. This can
involve statistical analysis, surveys,
experiments, or the use of economic models.
They use this data to assess whether their
hypotheses hold true.
 Applied
Economics
It is a social science because it
uses the scientific method to
study how society creates its
material wealth, how it makes
this wealth available to its
people with minimum
difficulties and expands its
wealth.
Functions of Economics as a
Social Science
1. Study of Human Behavior and
Societal Interactions
Economics focuses on understanding how
individuals, households, businesses, and
governments make choices regarding the
allocation of scarce resources. This involves
examining behaviors like consumption, saving,
and investment, which are influenced by
cultural, social, and psychological factors.
1. Study of Human Behavior and Societal
Interactions
EXAMPLE:
1. Choice of Purchasing an Electric Car:

• Scarce Resource: Limited budget.

• Decision Factors:
• Economic Factors: Cost of the car, potential savings on
fuel, tax incentives, and maintenance costs.
• Cultural Factors: Social norms around environmental
responsibility, influence of friends and family who own
electric cars.
• Psychological Factors: Personal values, attitudes towards
technology, perception of environmental impact.
Functions of Economics as a
Social Science
2. Wealth Creation
Economics analyzes how societies produce goods and
services, exploring the factors that contribute to economic
growth and development. This includes studying how
labor, capital, and natural resources are combined in
production processes, as well as the role of innovation and
technology in driving productivity.
2. Wealth Creation
EXAMPLE:
1. Production of Smartphones:

Labor:

• Skilled Labor: Engineers, designers, and software

developers work on designing and improving smartphone
models, operating systems, and applications. Their
expertise contributes to innovation in hardware and
software.

• Unskilled Labor: Factory workers assemble components,

package products, and manage logistics. Their availability
and cost can affect production capacity and pricing.
2. Wealth Creation
EXAMPLE:
1. Production of Smartphones:

Capital:

• Physical Capital: Factories, machinery, and tools are

required for manufacturing smartphones. Investments in
advanced machinery can increase production efficiency
and reduce costs.

• Financial Capital: Funds for research and development

(R&D), marketing, and distribution. Companies need
capital to invest in new technologies, expand production
facilities, and promote their products.
2. Wealth Creation
EXAMPLE:
1. Production of Smartphones:

Natural Resources:

• Raw Materials: Smartphones require various

natural resources, including rare earth metals
(e.g., lithium, cobalt) for batteries and
components, as well as silicon for semiconductors.
The availability and cost of these materials
influence production costs and pricing.
Functions of Economics as a
Social Science
3. Distribution of Wealth
A key concern in economics is how wealth and resources
are distributed within a society. This includes examining
income inequality, poverty, and the mechanisms through
which wealth is shared, such as through markets,
taxation, and social welfare programs. Economists study
the impacts of these mechanisms on different social
groups and the overall well-being of the population.
3. Distribution of Wealth
EXAMPLE:
Income Inequality and Social Welfare Programs
in the Philippines
Income
Inequality:
Situation: The Philippines has significant
income inequality, with a pronounced gap
between the wealthiest and the poorest
segments of the population. For example, the
wealthiest 10% of Filipinos hold a substantial
share of the country’s wealth, while many
lower-income families struggle with poverty.
3. Distribution of Wealth
EXAMPLE:
Income Inequality and Social Welfare Programs
in the Philippines
Imp
act: This disparity affects access to essential
services such as education, healthcare, and
housing, and limits economic opportunities for
poorer families.
3. Distribution of Wealth
EXAMPLE:
Income Inequality and Social Welfare Programs
in the Philippines
Social Welfare
Programs:
Pantawid Pamilyang Pilipino Program (4Ps):
Purpose:
A conditional cash transfer program that provides financial
assistance to low-income families, particularly those with
children. The aid is contingent upon fulfilling certain
conditions, such as sending children to school and
attending health check-ups.
3. Distribution of Wealth
EXAMPLE:
Income Inequality and Social Welfare Programs
in the Philippines
Social Welfare
Programs:
Pantawid Pamilyang Pilipino Program (4Ps):
Impact
Helps reduce poverty and improve the quality of life for
:
low-income households by providing financial support and
incentivizing investments in education and health. This
program aims to break the cycle of poverty and reduce
income inequality by providing direct aid to the most
vulnerable populations.
3. Distribution of Wealth
EXAMPLE:
PhilHealth
Purpose:
A national health insurance program that offers
coverage for medical expenses. It aims to provide
access to affordable healthcare services for all Filipinos,
particularly for low-income individuals who might
otherwise struggle to pay for medical care.
3. Distribution of Wealth
EXAMPLE:
PhilHealth
Impact
: y reducing out-of-pocket healthcare costs, PhilHealth
B
improves access to essential medical services and
reduces the financial burden of illness on low-income
families. This can help mitigate some of the effects of
income inequality by providing better health outcomes
and reducing financial stress.
3. Distribution of Wealth
EXAMPLE:
Taxation
Purpose:
The Philippines employs a progressive tax system,
where higher-income earners pay a higher percentage
of their income in taxes. Revenue from taxes is used to
fund public services and social welfare programs.
3. Distribution of Wealth
EXAMPLE:
Taxation
Impact
: Progressive taxation helps redistribute wealth from
higher earners to fund programs that benefit lower-
income individuals. This can help address income
inequality by providing resources for public services,
infrastructure, and social welfare initiatives.
3. Distribution of Wealth
EXAMPLE:
Education Programs
Purpose:
The government invests in public education to improve
access to schooling for all children, including those from
low-income families. Programs include scholarships,
school feeding programs, and infrastructure
improvements.
3. Distribution of Wealth
EXAMPLE:
Education Programs
Impact
:
Improving access to quality education helps bridge the
gap between different income groups by providing equal
opportunities for learning and skill development.
Education is a key factor in social mobility and can
contribute to reducing long-term income inequality.
 Economics is related to other subjects of knowledge.
It overlaps history, mathematics, sociology,
psychology, politics, religion, and many more.
Here’s how economics overlaps with various disciplines:

History
Economics and history are closely linked as historical
events often shape economic theories and policies.
Economic history examines how past economic systems,
crises, and policies have influenced present-day economic
conditions. Understanding historical contexts helps
economists and policymakers avoid past mistakes and
learn from previous successes.
 History
Example: COVID-19 Pandemic Response
and Historical Influences
Recent Developments:

Economic Impact of COVID-19:

Economic Slowdown: The pandemic led to a severe

economic contraction, with disruptions to businesses, job
losses, and a decrease in consumer spending. The
government faced the challenge of managing a significant
economic downturn while addressing public health concerns.
History
Example: COVID-19 Pandemic Response
and Historical Influences
Healthcare Strain: The pandemic put immense
pressure on the healthcare system, similar to how
past health crises (like the 1918 influenza
pandemic) demonstrated the need for a strong
and resilient healthcare infrastructure.
Economics is related to other subjects of knowledge.
It overlaps history, mathematics, sociology,
psychology, politics, religion, and many more.
Here’s how economics overlaps with various disciplines:

Mathematics
Mathematics is fundamental to economics, particularly in
areas like econometrics, optimization, and financial
modeling. Mathematical tools are used to analyze
economic data, develop models, and make predictions.
Concepts such as calculus, algebra, and statistics are
integral to economic analysis.
Economics is related to other subjects of knowledge.
It overlaps history, mathematics, sociology,
psychology, politics, religion, and many more.
Here’s how economics overlaps with various disciplines:

Sociology
Sociology and economics intersect in the study of social
behaviors and institutions that impact economic
outcomes. For example, sociologists and economists
might collaborate to understand how social norms, class
structures, or family dynamics influence economic
behaviors and inequalities.
sociology
exampl
The study found that ehouseholds with strong
extended family ties and active community support
networks experienced faster economic recovery
compared to those without such support. This
intersection of sociology and economics provided
insights into how social behaviors and institutions can
either mitigate or exacerbate economic vulnerabilities
in the face of natural disasters. The findings were
used to develop more effective disaster recovery and
social support policies.
Economics is related to other subjects of knowledge.
It overlaps history, mathematics, sociology,
psychology, politics, religion, and many more.
Here’s how economics overlaps with various disciplines:

Psychology
Behavioral economics, a growing field, combines economics
with psychology to study how psychological factors affect
economic decision-making. It explores how cognitive biases,
emotions, and social influences impact individual choices
and market outcomes.
psychology
exampl
e
The study aimed to understand why low-income
households often fail to save despite various financial
literacy programs and government incentives.
Researchers focused on psychological factors like
present bias and loss aversion to uncover the
underlying reasons for poor savings behavior.
 Economics is related to other subjects of knowledge.
It overlaps history, mathematics, sociology,
psychology, politics, religion, and many more.
Here’s how economics overlaps with various disciplines:

Politics
Economics and religion intersect in the study of how
religious beliefs and practices affect economic behavior. For
example, economists might explore how religious values
influence saving, spending, and investment practices, or how
religious institutions contribute to economic development
and charity.
 politics
exampl
e religious teachings on
Researchers explored how
stewardship, modesty, and charity affect the financial
decisions of Filipino Catholics.
Impact on Financial Decisions:

Savings and Investments: Filipino Catholics who

embrace the concept of stewardship are likely to prioritize
saving and investing responsibly, viewing these actions as
ways to manage their resources effectively and secure their
future.
 politics
exampl
e religious teachings on
Researchers explored how
stewardship, modesty, and charity affect the financial
decisions of Filipino Catholics.
Religious Teaching:
Modesty in Catholic teachings involves living simply
and avoiding excessive indulgence. It advocates for a
lifestyle that prioritizes spiritual over material wealth.
 politics
exampl
e religious teachings on
Researchers explored how
stewardship, modesty, and charity affect the financial
decisions of Filipino Catholics.
Impact on Financial Decisions:
Spending: Filipino Catholics who follow modesty
principles may practice frugality, avoiding extravagant
purchases and focusing on essential needs. They are
likely to spend within their means and avoid
conspicuous consumption.
POLITICS
exampl
e religious teachings on
Researchers explored how
stewardship, modesty, and charity affect the financial
decisions of Filipino Catholics.
Religious Teaching:
Charity in Catholicism is a fundamental virtue that
involves selfless giving and helping those in need. It
reflects the love and compassion taught by Jesus
Christ.
POLITICS
exampl
e religious teachings on
Researchers explored how
stewardship, modesty, and charity affect the financial
decisions of Filipino Catholics.
Impact on Financial Decisions:
Donations: Filipino Catholics may regularly contribute to
church activities, community projects, and charitable
organizations. Their financial decisions often include
setting aside a portion of their income for donations and
support of charitable causes.
THE SCOPE OF
ECONOMICS
 The scope of economics
encompasses its definition,
categorization as an art or science,
and its distinction between positive
and normative science.
 Economics as an Art
and a Science
• Art: Economics is considered an art
because it employs various theories
and laws using numerical and
statistical data such as graphs,
figures, tables, and equations.
• Science: It is a science as it
represents a systematized body of
knowledge. Economic facts are
studied and analyzed in a structured
manner, with established laws and
theories that explain causal
relationships between phenomena.
 Positive and
• Positive
Normative
Science: Focuses on
Science
describing and explaining economic
phenomena. It deals with what is and
provides objective analysis based on
observable data.
• Normative Science: Involves value
judgments and opinions on economic
policies. It deals with what ought to
be and includes subjective
perspectives on economic outcomes.
Positive Economics Example:
•"An increase in the minimum wage leads to higher labor costs for
businesses."
• This is a testable statement that can be verified using data and
analysis.

Normative Economics Example:

•"The government should increase the minimum wage to ensure
workers earn a living wage."
• This is based on value judgments about what is desirable or
fair.
•Positive economics deals with facts, predictions, and cause-
effect relationships.

•Normative economics involves opinions, ethics, and policy

recommendations.
 Example of Positive
Economics in the
Scenario:
Philippines
Analyzing the Impact of
the Regional Minimum
Wage Increase on
Employment and
Business Operations in
the National Capital
Region (NCR)
 Example of Positive
Economics in the
Objective:
Philippines
To describe and explain the
economic effects of the
recent regional minimum
wage increase on
employment levels and
business operations in NCR.
 Example of Positive
Observation: Economics in the
• The government of the
Philippines
Philippines recently increased
the minimum wage in NCR
from PHP 537 to PHP 570 per
day.
• The aim was to improve the
standard of living for workers
in the region.
 Example of Positive
Findings: Economics in the
• Employment: Data shows that
Philippines
employment in low-wage sectors
decreased by 3% within six months
following the wage increase, while
overall employment in NCR remained
stable.
• Business Costs: SMEs reported a 5%
increase in operating costs due to
higher wages.
• Business Responses: Surveys
indicated that 20% of businesses
reduced staff, 15% increased prices,
 Example of Normative
Economics
Scenario: in the Philippines

Debating the
Implementation of a
National Salary Increase for
Public Sector Employees
 Example of Normative
Economics in the Philippines
Objective:

To discuss and provide value

judgments on whether the
Philippine government should
implement a substantial salary
increase for public sector
employees, focusing on what
ought to be done to improve
their well-being and motivation.
 Example of Normative
Economics in the Philippines
Observation:
• Public sector employees in the
Philippines, such as teachers,
police officers, and government
clerks, have faced stagnant
wages despite rising costs of
living.
• There is a debate on whether a
significant salary increase for
these employees is justified and
how it would impact the
economy and society.
 Example of Normative
Economics in the Philippines
Value Judgments and Opinions:
• Proponents:
⚬ Fair Compensation: Supporters
argue that public sector
employees deserve a
substantial salary increase to
match the rising cost of living
and to compensate them fairly
for their essential roles. They
believe that better
compensation would improve
their quality of life and reduce
 Example of Normative
• Economics in the
Motivation and Morale: Philippines
Increasing salaries is
viewed as a way to
boost motivation and
morale among public
employees, leading to
improved performance
and productivity in
their roles.
 Example of Normative
• Economics
Attracting in
Talent: the
A Philippines
higher salary would
help attract skilled
professionals to the
public sector,
enhancing the quality
of services provided to
the public.
 Example of Normative
Economics
Opponents: in the Philippines
• Budget Constraints:
Critics argue that a
substantial salary
increase for public sector
employees could strain
the national budget,
potentially leading to
higher taxes or cuts in
 Example of Normative
PolicyEconomics
Recommendations: in the Philippines
• Proponents' View:
⚬ The government should
implement a substantial
salary increase for public
sector employees,
ensuring it is sufficient to
keep pace with inflation
and the rising cost of
living.
ECONOMICS
As a

Wealth
 Definition of
Economics as Wealth: Economics
Proponent: Adam Smith,
"Wealth of Nations" (1776).

Definition: Economics is the

study of wealth. Smith and
others like J.B. Say, J.S. Mill,
Walker, and B. Price
emphasized wealth, giving it
the primary focus, with human
beings considered secondary.
 Definition of
Economics as Wealth: Economics
Scenario: Evaluating the
Impact of Tourism on National
Wealth in the Philippines
 Definition of
Economics as Wealth: Economics
Objective: To assess how the
growth of the tourism sector
affects the national wealth of
the Philippines, including its
impact on local economies,
employment, and overall
economic development.
 Definition of
Economics as Wealth: Economics
Observation:
• The Philippines has seen
significant growth in its
tourism sector, with
increasing numbers of
international and domestic
tourists visiting popular
destinations like Boracay,
Palawan, and Cebu.
 Definition of
Economics as Wealth: Economics
Data Collection:
• Tourism Revenue: Gather
data on tourism revenue,
including expenditures by
international and domestic
tourists, and contributions
to local and national
economies.
 Definition of
Economics as Wealth: Economics
• Employment Data: Collect
data on employment in the
tourism sector, including
jobs created in hospitality,
travel services, and related
industries.
 Definition of
Economics as Wealth:

Analysis: Economics
1.Impact on National Wealth:
• Increased Revenue: Tourism
generates substantial revenue
through expenditures on
accommodations, food,
transportation, and activities. This
influx of revenue contributes to the
overall national wealth by
enhancing economic activity and
increasing government tax
revenues.
 Definition of
Economics as Wealth:

Analysis: Economics
2. Job Creation: The growth of the
tourism sector creates jobs across
various industries, including hotels,
restaurants, tour operators, and
transportation services. This
increase in employment contributes
to higher incomes and improved
living standards for workers,
enhancing national wealth.
 Definition of
Economics as Wealth:

Analysis: Economics
3. Infrastructure Development:
Tourism often leads to investments
in infrastructure such as airports,
roads, and public facilities. These
developments not only improve the
tourism experience but also benefit
local communities and contribute to
economic growth.
 Definition of
Economics as Wealth:
Economics
Impact on Wealth Distribution:

• Regional Economic Boost: Tourist-

dependent regions experience
significant economic boosts,
leading to increased wealth and
improved living standards for
local residents. For example,
areas like Boracay and Cebu see
higher local business revenues
and increased employment
opportunities.
 Definition of
Economics as Wealth:

Findings: Economics
• Tourism Revenue: Data shows
that tourism contributed PHP 3.5
trillion to the Philippine economy
in the last year, reflecting its
significant role in national wealth.
• Employment: The tourism sector
created approximately 1.2 million
jobs, contributing to a decrease
in unemployment rates in tourist-
dependent regions.
 Definition of
Economics as Wealth:

Findings: Economics
• Infrastructure: Investment in
tourism infrastructure has
improved connectivity and
facilities, leading to enhanced
economic activity and better
quality of life for residents.
• Regional Impact: Tourist-heavy
regions have seen a 15%
increase in local business
revenues, while less-visited areas
have not experienced similar
economic gains.
ECONOMICS
As a

Welfare
 Definition of
Economics as Welfare:

Proponent: Alfred
Economics
Marshall,
"Principles of Economics" (1890).
Definition: Economics is the study of
mankind in the ordinary business of
life, focusing on both wealth and
human welfare. Marshall placed
primary importance on humans,
considering wealth as secondary.
This definition integrates the social
aspect of economics, although it
mainly considers material welfare
and overlooks immaterial welfare.
 Definition of
Example of Economics as
Wealth and Welfare Economics
in the
Philippines

Scenario: Assessing the

Impact of the Pantawid
Pamilyang Pilipino Program
(4Ps) on National Wealth
and Welfare
 Definition of
Example of Economics as
Economics
Wealth and Welfare in the
Philippines

Objective: To evaluate how

the Pantawid Pamilyang
Pilipino Program (4Ps), a
conditional cash transfer
program in the Philippines,
impacts both national wealth
and the welfare of low-
income families.
 Definition of
Example of Economics as
Economics
Wealth and Welfare in the
Philippines

Observation:
• The 4Ps program
provides financial
assistance to low-income
households, conditional
on certain requirements
such as children’s school
attendance and regular
health check-ups.
 Definition of
Example of Economics as
Economics
Wealth and Welfare in the
Philippines

Data Collection:

• Program Expenditures:
Collect data on the total
amount of financial
assistance disbursed
through the 4Ps program
annually.
 Definition of
Example of Economics as
Economics
Wealth and Welfare in the
Philippines

Data Collection:

• Beneficiary Welfare:
Gather data on
improvements in health,
education, and overall
well-being among 4Ps
beneficiaries.
 Definition of
Example of Economics as
Wealth and Welfare in
Philippines
Economics
the

Analysis:
• Impact on National Wealth:
Increased Consumption: The
financial assistance provided by
the 4Ps program boosts
household income for low-
income families, leading to
increased consumption of goods
and services. This increase in
spending contributes to
economic activity and local
 Definition of
Example of Economics as
Wealth and Welfare in
Philippines
Economics
the

Analysis:
• Human Capital
Development: By linking
financial assistance to
education and health
requirements, the program
contributes to the
development of human
capital, which can enhance
long-term economic
productivity and national
 Definition of
Example of Economics as
Wealth and Welfare in
Philippines
Economics
the

Impact on Welfare:
• Improved Health and
Education: Data shows that
beneficiaries experience
better health outcomes and
higher school attendance
rates, leading to improved
quality of life and future
prospects for their children.
 Definition of
Example of Economics as
Wealth and Welfare in
Philippines
Economics
the

Impact on Welfare:
• Poverty Reduction: The
program helps lift many
families out of extreme
poverty, improving their
standard of living and
providing them with more
opportunities for economic
advancement.
 Definition of
Example of Economics as
Economics
Wealth and Welfare in the
Philippines

Findings:
• Program Expenditures:
The government
disbursed
approximately PHP 80
billion through the 4Ps
program in the past
year.
 Definition of
Example of Economics as
Economics
Wealth and Welfare in the
Philippines

Findings:
• Beneficiary Welfare:
Surveys indicate that 4Ps
beneficiaries have seen a
20% improvement in
household health and a
15% increase in school
attendance rates among
children.
 Definition of
Example of Economics as
Economics
Wealth and Welfare in the
Philippines

Findings:
• Economic Impact: Local
businesses in areas with
high concentrations of 4Ps
beneficiaries have
reported a 10% increase in
sales, reflecting the
economic boost from
increased household
 Definition of
Example of Economics as
Economics
Wealth and Welfare in the
Philippines

Findings:
• Wealth Distribution: The
poverty rate among 4Ps
beneficiaries has
decreased by 5% over the
past five years, indicating
a positive impact on
income distribution.
ECONOMICS
As

Scarcity
 Definition of
Economics as Scarcity:

Proponent: Lionel
Economics
Robbins, "Nature
and Significance of Economic
Science" (1932).
Definition: Economics is the science
that studies human behavior as a
relationship between ends and
scarce means which have alternative
uses. Robbins highlighted the
limitations of resources against
unlimited wants, thus broadening
the scope of economics to include
both material and non-material
goods. He also established
economics as a positive science,
 Definition of
Economics as Scarcity:
Economics
Scenario: Evaluating the
Impact of Scarcity of School
Facilities on Education
Quality in the Philippines
 Definition of
Economics as Scarcity:
Economics
Objective: To assess how the
scarcity of school facilities
affects the quality of
education and student
outcomes in the Philippines,
focusing on the economic
implications of limited
educational infrastructure.
 Definition of
Economics as Scarcity:
Economics
Observation:
• In the Philippines, many
schools face a shortage
of adequate facilities
such as classrooms,
laboratories, and
libraries. This scarcity
impacts the quality of
education and students'
ability to learn effectively.
 Definition of
Economics as Scarcity:
Economics
Data Collection:
• School Facility Data:
Collect data on the
number of schools with
overcrowded classrooms,
the availability of
essential facilities (e.g.,
science labs, libraries),
and the student-to-
teacher ratio.
 Definition of
Economics as Scarcity:
Economics
Data Collection:
• Student Performance:
Gather data on student
performance metrics,
including test scores,
graduation rates, and
student engagement
levels.
 Definition of
Economics as Scarcity:
Economics
Data Collection:
• Educational Budget:
Examine government and
local spending on
educational facilities and
infrastructure.
 Definition of
Economics as Scarcity:

Analysis:
Economics
• Impact of Scarcity:
⚬ Classroom Overcrowding:
Many schools operate with
high student-to-teacher
ratios due to insufficient
classrooms. This
overcrowding can
negatively affect student
learning, reducing individual
attention and limiting
effective teaching methods.
 Definition of
Economics as Scarcity:

Analysis:
Economics
• Impact of Scarcity:
⚬ Limited Facilities: Scarcity of
specialized facilities like
science laboratories and
libraries hampers students'
ability to engage in practical
and research-based
learning. This lack of
resources can lead to lower
educational outcomes and
reduced preparation for
higher education and the
workforce.
 Definition of
Economics as Scarcity:

Analysis:
Economics
• Economic Implications:
Future Workforce: Scarcity in
educational facilities affects
students' learning experiences and
academic achievements. Poor
educational quality can lead to a
less skilled workforce, limiting
economic productivity and growth.
 Definition of
Economics as Scarcity:

Findings:
Economics
• Facility Shortages: Data
indicates that around 25% of
public schools in the Philippines
face significant facility
shortages, with classrooms
often exceeding recommended
student limits.
 Definition of
Economics as Scarcity:

Findings:
Economics
• Budget Constraints:
Government spending on
school infrastructure is
insufficient to meet the growing
demands, with funding gaps
contributing to the persistence
of facility shortages.
Branches of Economics:
Microeconomics and
Macroeconomics
 Microeconomics
DEFINITION:
Microeconomics is the branch of economics that
focuses on the behavior and decisions of individual
economic units, such as consumers, producers, and
resource owners. It examines how these entities
interact in specific markets and how their decisions
impact prices, outputs, and resource allocation.
 Key Areas of Study
Consumer Producer Behavior Market Structures
Analyzes
Behavior how Examines how Studies different
consumers make businesses make market forms, such as
decisions about production decisions, perfect competition,
purchasing goods and including the monopoly,
services, including determination of monopolistic
how they allocate their output levels, pricing, competition, and
income to maximize and resource use to oligopoly, and their
utility. maximize profits. impact on pricing and
output.
 Key Areas of Study
Price Resource
Investigates how
Determination: Analyzes
Allocation:how
prices are determined resources are
in various markets and distributed among
how changes in supply various uses and how
and demand affect this allocation affects
prices and quantities. production and
efficiency.
 Example of Microeconomics in the

Philippines: Impact of Price Controls on

Scenario: Objective:
Rice
Analyzing the Effects To study how government-
imposed price controls (price
of Government- ceilings) on rice affect supply,
Imposed Price demand, and market
equilibrium in the Philippines,
Ceilings on Rice in and to understand the broader
the Philippines implications for consumers and
producers.
 Example of Microeconomics in the

Philippines: Impact of Price Controls on

Backgroun Data Collection:
Rice is a staple food in the Rice
d:
Philippines, and the government
Price Data:
often implements price controls to
• Gather data on the official
make it more affordable for price ceiling set by the
consumers, particularly during government for rice.
periods of inflation or supply • Collect data on the actual
shortages. A price ceiling is a market prices of rice before
maximum price set by the and after the imposition of
government, below the market
the price ceiling.
equilibrium price, to prevent prices
from rising too high.
 Example of Microeconomics in the

Philippines: Impact of Price Controls on

Data Collection: Demand
Supply Data:
Rice
• Collect data on rice production
Data:
• Gather data on consumer
demand for rice, including
levels and the quantity of rice
supplied by farmers and changes in consumption
distributors. patterns before and after
• Analyze any changes in the the price ceiling.
quantity of rice supplied • Examine any shifts in
following the implementation of demand due to price
the price ceiling. changes and consumer
behavior.
 Example of Microeconomics in the

Philippines: Impact of Price Controls on

Market Data: Impact on
• Analyze data on rice
Rice
•Supply:
Decreased Supply: Price ceilings
availability in markets, often result in a situation where the
including reports of price is set below the equilibrium
shortages or surpluses. price. This can lead to a reduction
in the incentive for producers to
• Collect data on black
supply rice, as they receive lower
market prices or unofficial prices than they would under
sales if price ceilings lead normal market conditions. Farmers
to supply issues. might produce less rice or sell it in
unofficial markets where they can
get higher prices.
 Example of Microeconomics in the

Philippines: Impact of Price Controls on

Impact on Impact on Demand:
• Supply Shortages: If
Rice
the
Supply: • Increased Demand:
price ceiling is too low, the
quantity of rice demanded With a lower price
by consumers exceeds the ceiling, consumers may
quantity supplied, leading to increase their demand
shortages. This imbalance for rice because it
results in limited availability becomes more
of rice in the market.
affordable.
 Example of Microeconomics in the

Philippines: Impact of Price Controls on Rice

Impact on Impact on Demand:
Demand:
• Increased Demand:
• Substitution: Consumers
may also seek alternative With a lower price
food sources if rice ceiling, consumers may
becomes scarce, affecting increase their demand
their overall diet and food for rice because it
security. becomes more
affordable.
 Macroeconomics
DEFINITION:
Macroeconomics is the branch of economics that studies the behavior, performance,
and structure of an economy as a whole. It focuses on aggregate indicators such as
GDP (Gross Domestic Product), unemployment rates, national income, inflation, and
overall economic growth. Macroeconomics looks at how these factors interact with
one another and how they are influenced by government policies, central banking
actions, and global economic events. It aims to understand and improve the overall
economic health and stability of a country or region.
 Macroeconomics
Macroeconomics examines the economy at a broad level, focusing
on the big picture rather than individual markets or businesses. It
deals with aggregate economic phenomena, such as:

Gross Domestic Product (GDP): Measures the total value

of all goods and services produced within a country in a
given period.
 Macroeconomics
Macroeconomics examines the economy at a broad level, focusing
on the big picture rather than individual markets or businesses. It
deals with aggregate economic phenomena, such as:

Gross Domestic Product (GDP): Measures the total value

of all goods and services produced within a country in a
given period.
 Macroeconomics
Macroeconomics examines the economy at a broad level, focusing
on the big picture rather than individual markets or businesses. It
deals with aggregate economic phenomena, such as:

Gross national product (GNP) is an estimate of the total value

of all the final products and services turned out in a given
period by the means of production owned by a country's
residents.
 Income Approach of GNP/GDP
Problem:
A country's economy has the following data (in million PHP):
•Compensation of employees: PHP 2,000 million
•Rent: PHP 500 million
•Interest: PHP 300 million
•Proprietors' income: PHP 400 million
•Corporate profits: PHP 700 million
•Indirect taxes less subsidies: PHP 200 million
•Depreciation: PHP 250 million
•Inflow from abroad: PHP 150 million
•Outflow to abroad: PHP 100 million
 Calculate the Gross National Product (GNP) and Gross Domestic
Product (GDP) using the Income Approach formula.
Formula:
GNP = Compensation of Employees + Rent + Interest + Proprietors'
Income + Corporate Profits + Indirect Taxes - Subsidies +
Depreciation + Net Factor Income from Abroad (NFIA)
Formula:
GDP = GNP - Net Factor Income from Abroad (NFIA)

Formula:
Net Inflow = Inflow − Outflow
or equivalently,
Net Inflow = −Inflow + Outflow
Step 2: Formula for GNP
GNP = Compensation of Employees + Rent + Interest +
Proprietors’ Income + Corporate Profits +
Indirect Taxes less Subsidies + Depreciation + Net Inflow
In the Philippines, the Philippine
Statistics Authority (PSA) is the
government agency responsible for
compiling, analyzing, and reporting data
about the Gross National Product (GNP)
and Gross Domestic Product (GDP).
 Macroeconomics
Macroeconomics examines the economy at a broad level, focusing
on the big picture rather than individual markets or businesses. It
deals with aggregate economic phenomena, such as:

Unemployment: Analyzes the overall job market and the

rate of people who are actively seeking work but cannot
find employment.
 Macroeconomics
Macroeconomics examines the economy at a broad level, focusing
on the big picture rather than individual markets or businesses. It
deals with aggregate economic phenomena, such as:

Inflation: Studies changes in the price level of goods

and services over time, which affects the purchasing
power of money.
 Macroeconomics
Macroeconomics examines the economy at a broad level, focusing
on the big picture rather than individual markets or businesses. It
deals with aggregate economic phenomena, such as:
Monetary Policy: Involves the actions of a central bank, like
adjusting interest rates and controlling the money supply to
influence economic activity. Monetary Policy: Involves the actions of
a central bank, like adjusting interest rates and controlling the
money supply to influence economic activity.
 Macroeconomics
Macroeconomics examines the economy at a broad level, focusing
on the big picture rather than individual markets or businesses. It
deals with aggregate economic phenomena, such as:
Fiscal Policy: Concerns government spending and taxation
decisions that impact the economy.
 Macroeconomics
Macroeconomics examines the economy at a broad level, focusing
on the big picture rather than individual markets or businesses. It
deals with aggregate economic phenomena, such as:
Economic Growth: Looks at how the economy expands over time
and the factors that contribute to long-term increases in output and
living standards.
 DEDUCTIVE AND
INDUCTIVE METHODS
in Economics
To study economics, two primary methods
are used: the deductive method and the
inductive method. Each method has its
approach to analyzing economic
phenomena and deriving conclusions.
 Deductive Method
Definition: The deductive method proceeds from
general to particular. It involves reasoning from
established principles or laws to analyze specific
facts or cases. This method is also known as a
descending process, where general principles are
applied to particular instances to deduce
conclusions.
 Deductive Method
Process:
• Establish General Principles: Start with widely accepted
economic theories or laws.
• Apply Principles to Specific Cases: Use these general
principles to analyze specific economic situations or
problems.
• Derive Conclusions: Draw conclusions about the specific
cases based on the application of the general principles.
 Deductive Method
Example:
• Law of Demand: The general principle that, ceteris paribus,
an increase in the price of a good leads to a decrease in its
quantity demanded. Applying this principle, one can deduce
that if the price of rice increases in the Philippines, the
quantity of rice demanded by consumers will decrease,
assuming other factors remain constant.
 Inductive Method
Definition
The inductive method involves reasoning from particular to
general. It is an ascending process that starts with specific
observations or cases and moves towards generalizations. This
method involves collecting data, forming hypotheses, making
generalizations, and verifying the results.
 Inductive Method
Process:
• Observation: Collect specific data or observe particular
economic phenomena.
• Formation of Hypothesis: Based on the observations, form
hypotheses or tentative explanations.
• Generalization: Use the hypotheses to make broader
generalizations or theories.
• Verification: Test the generalizations or theories with further
data to verify their accuracy.
 Inductive Method
Example:
Study of Consumer Spending: Researchers observe that a
significant number of consumers in a particular region of the
Philippines increase their spending during festive seasons.
Based on this observation, they form a hypothesis that festive
seasons lead to higher consumer spending. They then collect
data from different regions and times, generalize the findings to
a broader context, and verify the hypothesis to establish a
general economic theory about consumer spending patterns
during festive seasons.
 REMEMBER

Deductive Method: General to particular.

Inductive Method: Particular to general.
 By Group (PT2)
Pop-up(plied) Card

Applied Economics
Instruction
Instructions for Making a Pop-Up Card
s
1.Look through magazines or newspapers to
find and cut out two pictures: one showing
economic activity (e.g., a marketplace or
graph) and another showing physical sciences
(e.g., a laboratory or scientific experiment).

2. Fold a piece of cardstock or thick paper in

half to create your card base, then add pop-
up tabs inside for attaching the pictures.
Instruction
3. Glue the economics picture on one side and the
s
physical sciences picture on the other, ensuring
they pop up when the card is opened.
4. Write a short explanation below the economics
picture about how economics studies human
behavior and social systems related to production
and consumption.
5. Write a short explanation below the physical
sciences picture about how physical sciences focus
on studying the natural world through
experiments and observation