INTRODUCTION
TO APPLIED
ECONOMICS
LESSON 1
966 473 2241
LEARNING TARGETS
1
I can define the basic
terms in applied
economics.
3
I can identify the types
of problem economists
study.
2
I can explain how the
fundamental lessons of
economics can be
applied.
4
I can explain why
applied economics and
economic theory are
closely related.
TABLE OF CONTENTS
01
INTRODUCTION
Short game
02
ACTIVITY
Breakout Session
03
WHAT ECONOMICS
IS ABOUT
Basic Terms
SCARCITY AND
APPLICATION OF
ECONOMICS
04
Underlying Ideas
PROBLEMS
ECONOMISTS STUDY
05
Classifications
THEORY AND
APPLICATION
Theory VS Model
06
BASIC TERMS
ACTIVITY
1.
2.
3.
I will divide you in groups of three.
Think of the questions below and discuss your answers
within the group.
You will be given 10 minutes.
QUESTIONS
1.
2.
3.
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?
INSTRUCTIONS
ACTIVITY
SCARCITY,
CHOICE AND
TRADE-OFFS
Sino ang
pipiliin ko?
Ano ang
pipiliin ko?
People want goods and
services.
Scarcity is a situation in which people cannot
have everything that they want because of
limited resources.
Resources are the most basic elements that
people use to produce the goods and services.
ECONOMICS
as a social science, involves the use of
scarce resources to satisfy unlimited wants.
CHOICES
Have fo be made when resources are scarce.
Trade-offs happen when two things cannot be
obtained or done at the same time.
Opportunity Cost refers to the value of the
best foregone alternative.
When was the last
time you are forced
to a make a choice,
i.e, you faced
trade-off?
INDIVIDUAL
Trade-off arises from scarce time or scarce
money (spending power).
SOMETHING IS FREE FOR YOU IF YOU CAN
HAVE IT WITHOUT GIVING UP SOME OF
YOUR MONEY OR YOUR TIME.
A trade-off arises from the scarcity
of resources: land, labor, capital, and
entrepreneurship
FOR SOCIETY AS A WHOLE
RESOURCES
01
LAND
02
LABOR
03
CAPITAL
04
ENTREPRENEURSHIP
CLASSIFYING
PROBLEMS
ECONOMIST
STUDY
LEVEL OF DETAIL
MICROECONOMICS
Close-up view of the
economy and analyzes
individual parts
Consumer, business
firm, industry, single
market
MACROECONOMICS
Stands back from
individual parts of an
economy and takes an
overall view of the
economy
Unemployment,
inflation, interest rates,
taxes
BASIC
ECONOMIC
PROBLEMS
WHAT TO PRODUCE
Because of scarcity...
The society must decide what
goods and what services should be
produced in the economy.
HOW MUCH TO
PRODUCE
Because of scarcity...
Having decided on the nature of
goods that will be produced, the
quantity to these foods should
also be decided on.
HOW TO PRODUCE
is a question on the production method that
will be used to produce the goods and
services. This refer to the resource mix and
technology that will be applied in production.
FOR WHOM TO PRODUCE
is about the market for the goods. For whom
will the goods and services be produced? The
young or old, the male or female market, the
low- income or the income groups?
ECONOMIC
SYSTEMS
To answer the economic problems mentioned,
society developed economic systems.
TRADITIONAL
Decisions are based on traditions and practices
upheld over the years and passed on from
generation to generation. Methods are stagnant
and not progressive.
Traditional economies exist in primitive and
backward civilizations.
COMMAND
This is the authoritative system wherein
decision-making is centralized in the government
or a planning committee. Decisions are imposed
on the people who do not have a say in what to
produce. This economy holds true in dictatorial,
socialist, and communist nations.
MARKET
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’s preference are
reflected in the prices they are willing to pay in
the market and are therefore the basis of the
producer’s decisions on what goods to produce.
ECONOMICS
IN ACTION
SCARCITY AND
APPLICATION
OF ECONOMICS
FIRST
●
Economics provide you with
tools for understanding the
world around you, especially in
making choices under
conditions of scarcity.
SECOND
●
Economics can help you predict
the likely effects of events and
government actions.
THIRD
●
The lessons in economics can
be used as a guide in making
personal and business
decisions.
966 473 2241
LEARNING TARGETS
1
I can define the basic
terms in applied
economics.
3
I csn identify the types
of problem economists
study.
2
I can explain how the
fundamental lessons of
economics can be
applied.
4
I can explain why
applied economics and
economic theory are
closely related.
THANKS
Do you have any questions?
br.ivanfsc@lsa.ph
+63 966 473 2241
yourcompany.com
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