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

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
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

INDUSTRIAL STAGE

ABM_AE12
APPLIED ECONOMICS
REVISITING ECONOMICS AS A SOCIAL SCIENCE

ROWTOW’S 5 STAGAES OF ECONOMIC DEVELOPMENT

AGE OF
D HIGH
R MASS
I
V C
P E
R T O
E A TO N
C K S
T O
R N E M U
A M
D
D O A
I I F T P
T T U
I I
F T
R I
O O
N I
N O
A T
L Y N
TO TAKEOFF

ABM_AE12
APPLIED ECONOMICS
REVISITING ECONOMICS AS A SOCIAL SCIENCE

The Development of Philippine

Economics
Pre-
Hispanic
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 _______ which means “household
management”.
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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