Module 1

Lesson 2
THE NATURE AND SCOPE OF
ECONOMICS

HOMAPON HIGH SCHOOL SENIOR HIGH SCHOOL

Subject Title:
APPLIED ECONOMICS
Teacher: ROMMEL U. QUIONES

PRE-TEST
I.

True or False: Carefully read each sentence and

determine if the sentence is true or if the
sentence is false.
1.

2.

3.

4.

5.

Economics comes from the Greek word

oikonomia which means household chores.
Economics is considered a field of social
science.
Economics is relevant because it is part of
everybodys life.
There are three (3) divisions of Economics,
the microeconomics, the macroeconomics
and the home economics.
As a science, Economics is related to other
sciences.

ACTIVITY
In front of you are candies that
you could get and eat. Come on,
everybody is invited to get
candies. Do not be shy

ANALYSIS
What

happened when you were

invited to get candies? State
your observation.

Let us define Economics

Using

the words written on the board,

how would you define Economics?

ECONOMICS AS DEFINED
From the Greek words Oikos meaning household
and nomos meaning management
= household management

ECONOMI
CS
The wise production and use of wealth to
meet the demands or needs of the people

ECONOMICS IN OUTLINE
Economics

is derived from two Greek words

Oikos- a house
Nemein- to manage
Means managing an household

DEFINITIONS
ADAM SMITH (1723 - 1790),
Father of Economics

Book An Inquiry into Nature and Causes of

Wealth of Nations (1776)

defined ECONOMICS as the practical

science of production and distribution of
wealth.

In this definition wealth is given the first

place and man is given the second place

DEFINITIONS
ALFRED MARSHALL (1842 - 1924)

book Principles of Economics (1890)

defined Political Economy or Economics

is a study of mankind in the ordinary
business of life;

it examines that part of individual and

social action which is most closely
connected with the attainment and with
the use of the material requisites of well
being.

DEFINITIONS
LIONEL ROBBINS (1932 -)

book An Essay on the Nature and

Significance of Economic Science in 1932.

According to him, economics is a science

which studies human behaviour as a
relationship between ends and scarce
means which have alternative uses

Ends human wants

Means resources with which wants are

fulfilled

DEFINITIONS

Prof. PAUL SAMUELSON

defined economics as the study of how
men and society choose, with or without
the use of money, to employ scarce
productive resources which could have
alternative uses, to produce various
commodities over time, and distribute them
for consumption, now and in the future
among various people and groups of
society

SCHOLARLY DEFINITIONS

Roger Le Roy Miller (Economics, Today and

Tomorrow)
Economics concerns situations in which choices
must be made about how to use limited
resources, when to use them and for what
purposes. Resources can be defined as the things
people use to make the commodities they want.

Hall and Loeberman (Macroeconomics: Principles

and Applications)
The study of choice under the condition of
scarcity

SCHOLARLY DEFINITIONS

Bernardo Villegas (Guide to Economics for

Filipinos)
A social science that studies and seeks to
allocate scarce human and non-human resources
among alternatives in order to satisfy unlimited
human wants and desires.

Gerardo Sicat (Economics)

a scientific study which deals with how
individuals and society make choices,

COMMON WORDS AMONG

DEFINITIONS

Scarcity- a situation wherein the amount of

something available is insufficient to
satisfy the desire for it.

Resources - The labor, capital, land and

natural resources and entrepreneurship
that are used to produce goods and
services.

Unlimited without limits, infinite

Wants desires

FINALLY
ECONOMICS

is a social science that

deals with how people organize
themselves in order to allocate scarce
resources in order to produce goods
and services that will satisfy the
unlimited and multiplying wants and
needs of man.

CONCERNS OF ECONOMICS

ECONOMICS is concerned with

PRODUCTION
Production is the use of inputs to
produce outputs.
Inputs are commodities or services that
are used to produce goods and services.
Outputs are the different goods and
services which come out of production
process.
Society have to decide what outputs
will be produced and in what
quantity

CONCERNS OF ECONOMICS
Economics is concerned with
DISTRIBUTION
Distribution is the allocation of the total
product among members of society. It is
related to the problem of for whom goods
and
services
are
to
be
produced.
Economics is concerned with
CONSUMPTION
Consumption is the use of a good or
service. Consumption is the ultimate end
of economic activity. WHEN THERE IS NO
CONSUMPTION, THERE WILL BE NO NEED
FOR PRODUCTION AND DISTRIBUTION.

HISTORICAL DEVELOPMENT
OF ECONOMICS

DIVISIONS OF ECONOMICS
ECONOMICS
MACROECONOMICS
General, economy as a whole

MICROECONOMICS
Specific

Deals with the economic

behavior of the whole economy
or its aggregate such as
government, business,
unemployment, inflation and
the like.

Deals with the economic

behavior of the
individual units such as
consumers, firms, the
owners of factors of
productions

Refers to management of
income, expenditures, wealth or
resources of a nation.

THE SCOPE OF ECONOMICS

Macroeconomics is
the branch of
economics that
examines the
economic behavior of
aggregates
income, output,
employment, and so
on on a national
scale

Microeconomics is
the branch of
economics that
examines the
functioning of
individual industries
and the behavior of
individual decisionmaking units that
is, business firms and
households.

The Macroeconomics and Microeconomics Outline

Microeconomic
s

Production

Prices

Income

Employment

Production/
Output in
Individual
Industries
and
Businesses

How much
steel?
How many
offices?
How many
cars?

Price of
Individual Goods
and Services

Price of medical
care
Price of gasoline
Food prices
Apartment rents

Distribution of
Income and
Wealth

Wages in the
auto
industry
Minimum
wages
Executive
salaries
Poverty

Employment by
Individual
Businesses &
Industries

Aggregate Price
Level

Consumer prices
Producer Prices
Rate of Inflation

National
Employment
Income
and
Total wages and Unemployment
salaries
in the Economy

Total corporate
Total number of
profits
jobs
Unemployment
rate

Macroeconomic National
s
Production/O
utput

Total
Industrial
Output
Gross
Domestic
Product
Growth of
Output

Jobs in the steel

industry
Number of
employees in a
firm

ECONOMICS AS A SCIENCE

Is a science because it is an organized body

of truth, coordinated, arranged and
systematized with reference to certain
general laws and principles.(Observation,
Formulation of theories, Gathering of data, Experimentation,
Conclusion, Generalization)

Economic analysis seeks to explain

economic events using some kind of logic
based on a set of systematic relations.

It is a social science because the subject

matter of economics is people or societies

Relations of Economics to
other Sciences

POST TEST
I.

True or False: Carefully read each sentence and

determine if the sentence is true or if the
sentence is false.
1.

2.

3.

4.

5.

Economics comes from the Latin word

oikonomia which means household
management
Economics is considered a branch of social
sciences.
Economics is relevant because it is part of
our way of life.
There are three (3) divisions of Economics,
the microeconomics, the macroeconomics
and the home economics.
As a science, Economics is related to other

ESSAY
Is Economics a science?
Explain why if yes or why not if no