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APPLIED ECONOMICS

Introduction to Applied

Economics

ABM_AE12

APPLIED ECONOMICS

Course Description

This course deals with the basic principles 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.

ABM_AE12

APPLIED ECONOMICS

Revisiting Economics as a Social Science

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Objectives

At the end of the lesson, the learner is expected to:

  • define basic terms in Social Science Economics

  • explain why Economics became a social science

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Pre-test

  • I. True or False: Carefully read each sentence and determine if the sentence is true or if the sentence is false.

    • 1. Economics comes from the Greek word oikonomia which means household chores.

    • 2. Economics is considered a field of social science.

    • 3. Economics is relevant because it is part of everybody’s life.

    • 4. There are three (3) divisions of Economics, the microeconomics, the macroeconomics and the home economics.

    • 5. As a science, Economics is related to other sciences.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

II. Essay. Answer the following using five (5)

sentences and above.

  • a. As an individual, what do you think is the essence of

studying economics?

  • b. How do you apply economics in your household?

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Start Up Activities:

In front of you are candies that you could

get and eat. Come on, everybody is invited to get candies. Do not be shy…

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Analyses of the activity

What happened when you were invited to get candies? State your observation.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Economic defined

From the Greek words Oikos meaning household and nomos meaning management

=

household management

ECONOMICS
ECONOMICS

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

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Economics as defined by authors of Economics books

Paul Samuelson (Economics)

“the study of how people and society end up choosing, with or without use of

money, to employ scarce resources that could have alternative uses to

produce various commodities among various persons and groups in society.”

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”

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

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,”

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

What is Economics?

Economics is the study of social behavior guiding in the allocation of scarce resources to meet the unlimited needs and desires of the individual

members of a given society.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

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

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Economics as a study of Wealth

The earlier definition of economics as the science of wealth-getting and wealth-using implies

that the motivation of the process of wealth

accumulation is the utilization of wealth for the individual’s satisfaction and society’s welfare.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Economics as a study of making choices

In everything we do, whether we produce or consume, whether wealth-getting or wealth-using,

we make decisions and these decisions are based

on alternative choices.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Economics as a study of allocation

The definition of economics as a social science that deals with the study of allocation of scarce

resources to answer the unlimited wants.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

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

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

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.

Economics deals with PUBLIC FINANCE

Public Finance is concerned with government expenditures and revenues. Economics studies how the government raises money through taxation and borrowing.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

DIVISIONS OF ECONOMICS

ECONOMICS
ECONOMICS

MICROECONOMICS

Specific

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

MACROECONOMICS

General, economy as a whole Deals with the economic behavior of the whole economy or its aggregate such as government, business, unemployment, inflation and the like. Refers to management of income, expenditures, wealth or resources of a nation.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Types of Economics

  • 1. Household Economics most common use of economics is for the family. At this level, anyone who knows the economic principles will be able to improve the running of the household.

  • 2. Business Economics when a person or group of persons begins to work, they come under the system of business economics in their workplace. In this type, you deal with the rent, salary, profits and others.

  • 3. National Economics Economic factors of problems affecting the whole nation. Deals with the management of income, expenditures, wealth or resources of a nation.

  • 4. International Economics The highest stage of economic activities involving the business of one country with other countries like trade, tourism, exchange rates.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Is Economics a science?

Explain why if “yes” or why not if “no”

?

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

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.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Essence of Studying Economics

To understand the world better

Applying the tools of economics can help you understand global and cataclysmic

events such as wars, famines, epidemics, and depressions. Economics has the power to

help us understand these phenomena because they result from the choices we make under the condition of scarcity.

To gain self-confidence and become wise decisions makers

Mastery of economics will help you to understand how things work in your society

thereby “feeling equipped”

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

To achieve social change and contirbute to National Development

Economics can help us understand the origins of serious social problems such as:

unemployment, hunger, poverty, disease, child abuse, drug addiction, violent crime. It will also explain why previous efforts to solve these problems have failed, and help us

to design new, more effective solutions.

To help prepare for other careers

Economics has long been a popular college major for individuals who are intending to

work in business. But it has also been popular among those planning careers in

politics, international relations, law, medicines, engineering, etc. This is for good

reason because practitioners in each of these fields often find themselves confronting economic issues.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Historical Development of Economics

HUNTING AND FISHING PASTORAL STAGE AGRICULTURAL STAGE HANDICRAFT STAGE
HUNTING AND FISHING
PASTORAL STAGE
AGRICULTURAL STAGE
HANDICRAFT STAGE

INDUSTRIAL STAGE

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

AGE OF MASS O N S M P T I N
AGE OF
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ROWTOW’S 5 STAGAES OF ECONOMIC DEVELOPMENT

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APPLIED ECONOMICS REVISITING ECONOMICS AS A SOCIAL SCIENCE AGE OF MASS O N S M P
T A E
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P R E O N T O N TO TAKEOFF
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  • C K

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APPLIED ECONOMICS REVISITING ECONOMICS AS A SOCIAL SCIENCE AGE OF MASS O N S M P
  • I F

  • I F

APPLIED ECONOMICS REVISITING ECONOMICS AS A SOCIAL SCIENCE AGE OF MASS O N S M P
R I E TO A T U R T Y
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APPLIED ECONOMICS REVISITING ECONOMICS AS A SOCIAL SCIENCE AGE OF MASS O N S M P
  • M U

    • I O

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

The Development of Philippine

Economics

Pre-

Hispanic

Digong Gov’t
Digong
Gov’t

Fill in the economic development of the Philippines and the

significant policies in each stage.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Problems and Application:

How much did you spend on the last item you bought for yourself? What other things could

you have bought with the same amount of

money? Why didn’t you buy the other items you

just listed?

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Activity: Newspaper Clipping

Cut an article from any leading newspaper under the business section. Identify the article

whether Microeconomics or Macroeconomics.

Discuss and be able to explain why the article falls under the Microeconomics or

Macroeconomics. (Note: Be able to specify the

exact issue of the newspaper).

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Quiz: Identification

  • 1. Economics came from the Greek word management”.

which means “household

_______

  • 2. According to him, economics is “a scientific study which deals with how individuals and society make choices.”

  • 3. It is the study of social behavior guiding in the allocation of scarce resources to meet the unlimited needs and desires of the individual members of a given society.

  • 4. The earlier definition of economics as the science of wealth-getting and wealth-using implies that the motivation of the process of wealth accumulation is the utilization of wealth for the individual’s satisfaction and society’s welfare.

  • 5. It deals with the economic behavior of the individual units such as consumers, firms, the owners of factors of productions

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

  • 6. It 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.

  • 7. It is used of good and services.

  • 8. It is the use of inputs to produce outputs.

  • 9. It refers to management of income, expenditures, wealth or resources of a nation.

10. In everything we do, whether we produce or consume, whether wealth-getting or wealth-using, we make decisions and these

decisions are based on alternative choices.

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Part II. Enumeration. 1 4. Common words in Economics

  • 5 7. Study of Economics

  • 8 11. Concerns of Economics

    • 12 13. Divisions of Economics

    • 14 17. Types of Economics

    • 18 22. Historical Development of Economics

  • 23 27 Rowtow’s 5 Stages of Economic Development

  • 28 30. Essence of Studying Economics

ABM_AE12

APPLIED ECONOMICS

REVISITING ECONOMICS AS A SOCIAL SCIENCE

Reference:

Tullao Jr., Tereso S. Applied Economics For A Progressive Philippines. Phoenix Publishing House;

927 Quezon Ave., Quezon City. 2016

Pagoso, Cristobal M. Philippine Economics (Macro Approach). NELSON PUBLICATION; Marimar

Village Paranaque City. 2003

Carnaje, Gideon P. Applied Economics. Vibal Group Inc, Araneta Avenue, Quezon City. 2016

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