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    APPLIED ECONOMICS MODULE Sources: Applied Economics by Roman D. Leano Jr. and Applied Economics by DIWA Prepared By: Ms. Jocel Rose B. Ngabit

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    1. Economics is the study of how people make decisions regarding scarce resources and unlimited wants. It examines how households and societies choose to use resources. 2. Scarcity means that resources are limited in supply relative to human wants. This creates the economic problem of allocating resources. Market systems and command systems are two mechanisms used to allocate resources. 3. Market systems use price signals to allocate resources, with supply and demand determining price. Command systems involve central allocation of resources by the government. Tradition and social norms also influence allocation.

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    APPLIED ECONOMICS MODULE Sources: Applied Economics by Roman D. Leano Jr. and Applied Economics by DIWA Prepared By: Ms. Jocel Rose B. Ngabit

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    na2than-1
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    1. Economics is the study of how people make decisions regarding scarce resources and unlimited wants. It examines how households and societies choose to use resources. 2. Scarcity means that resources are limited in supply relative to human wants. This creates the economic problem of allocating resources. Market systems and command systems are two mechanisms used to allocate resources. 3. Market systems use price signals to allocate resources, with supply and demand determining price. Command systems involve central allocation of resources by the government. Tradition and social norms also influence allocation.

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    1. Economics is the study of how people make decisions regarding scarce resources and unlimited wants. It examines how households and societies choose to use resources. 2. Scarcity means that resources are limited in supply relative to human wants. This creates the economic problem of allocating resources. Market systems and command systems are two mechanisms used to allocate resources. 3. Market systems use price signals to allocate resources, with supply and demand determining price. Command systems involve central allocation of resources by the government. Tradition and social norms also influence allocation.

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    © All Rights Reserved
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    Download as doc, pdf, or txt
    138 views3 pages

    APPLIED ECONOMICS MODULE Sources: Applied Economics by Roman D. Leano Jr. and Applied Economics by DIWA Prepared By: Ms. Jocel Rose B. Ngabit

    Uploaded by

    na2than-1
    1. Economics is the study of how people make decisions regarding scarce resources and unlimited wants. It examines how households and societies choose to use resources. 2. Scarcity means that resources are limited in supply relative to human wants. This creates the economic problem of allocating resources. Market systems and command systems are two mechanisms used to allocate resources. 3. Market systems use price signals to allocate resources, with supply and demand determining price. Command systems involve central allocation of resources by the government. Tradition and social norms also influence allocation.

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    © All Rights Reserved
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    APPLIED ECONOMICS MODULE Sources: Applied Economics by Roman D. Leano Jr.

    and Applied Economics by DIWA


    Prepared by: Ms. Jocel Rose B. Ngabit

    INSTRUCTIONS: Read and analyze the following topics given below and provide the needed
    answer on the space provided.

    Economics- Came from the Greek words, oikos which means household a n d nomus
    which means management or oikonomus/oikonomia w h i c h m e a n s household management.-
    It is the study of how we make decisions in a world where resources are limited-It is the social
    science that studies the human behavior of people in the society on how they make their
    choices

    Basic terms in economics:


    Needs - the things that we need for survival
    Wants - the things that we would like to have
    Scarcity – it is a commodity or service being in short supply
    Goods – anything that yields satisfaction to someone
    Economic Resources- inputs used in the production of goods and services

    Importance of studying economics:

    1. Economics analysis provides us with guidelines to wise action and behavior


    2. To prudently evaluate our choices before making a decision
    3.To understand why there is a need to save and invest
    4.To understand why government work hand-in-hand with the private sector

    Applied Economics/Economics as an applied science- It is the application of economics


    theories and models in real life. It consists of learning how choices effect individual
    decision-making and how the availability of factors aid decision workers craft sound
    judgment. Concepts of studying economics:

    A. Problems of scarcity Limited Resources Unlimited wants and needs Scarcity

    Definition of Economics
    • Economics as a study of wealth
    – Utilization of wealth for production and consumption
    • Economics as a study of making choices
    – Opportunity cost: forgone benefits of an alternative when making a choice
    • Economics as a study of allocation
    – Allocation of scarce resources to answer unlimited human wants
    • Economics as a social science
    – As a science, uses scientific method of inquiry
    – As a social science, uses the scientific method to study how society creates its
    material wealth, how it make this wealth available to its people with minimum
    difficulties and it expands its wealth
    • Resources and the study of economics
    – Natural resources, Human resources, Physical or man-made resources
    • Resources and the study of economics (cont.)
    – Raw materials: inputs of production subject to further processing and
    transformation
    – Factor inputs: transforming inputs that process the raw materials and intermediate
    inputs into final goods and services
    – Resources are limited: time-consuming, competing uses
    • Human wants and economic analysis
    – Human wants are differentiated human needs brought about by differences in
    income, taste, environment, socioeconomic status, etc.
    • Scarcity as a source of economic problem
    – Scarcity: limitation of resources to answer the expanding human wants
    – Economic goals of society: material survival, stability and growth
    • Scarcity vs. Shortage vs. Surplus
    • Allocation and the act of economizing
    – Allocation: Social mechanism of distributing limited resources to
    meet expanding human wants
    • Market system as an allocation mechanism
    – Market: state where buyers and sellers transact on the purchase or sale
    of a good or service
    – Price as cost (sacrifice) and benefit (satisfaction)
    – The problem of scarcity is addressed through the changes in price and
    the corresponding responses of the buyers and sellers
    • Market system
    – How can the market system address shortage? or surplus?
    – 3 basic economic questions:
    – What to produce: increasing prices = high demand
    – How to produce: maximize profit by lowering cost of production
    – For whom to produce: allocating a higher proportion of output to members of a
    society with high purchasing power
    • Command system as an allocation mechanism
    – The state or agency of the government may be in charge in the allocation of
    resources by using its political power in addressing the basic economic problems
    of production and distribution
    – Used in times of calamities, disasters or national emergencies when the market
    system cannot fully operate
    – Used in normal times by totalitarian and socialist states to pursue industrialization
    and self-reliance, dictated by the planning agency of the government
    • Tradition in the process of allocation
    – Useful in situations where the operation of a market may not be appropriate or the
    power of an organized state has no control over a certain community
    – Uses culture, social norms to temper wants by use of community pressure and
    criticisms; resources are communally owned and distribution is collectively
    practiced
     Used by indigenous communities

    • Economics is a social science and it deals with how people interact with one
    another to sustain, stabilize and develop the material dimension of a society
    • Many of the principles, laws and theories developed in economics can be applied to
    a number of fields.

    Guided Reading Activity

    What is Economics?

    Review Questions

    Directions: Read each main idea and answer the questions below. Refer to your text as you write
    the answers.

    The Scope of Economics


    Main Idea: Economics uses description, analysis, explanation, and prediction to study people’s
    efforts to satisfy wants and needs through management of scarce resources. Economics is also a
    social science because it studies people’s behaviors as they deal with scarcity

    1. What is gross domestic product, and how is it a description of economic activity?

    2. How can explanation make it easier to address economic problems in the future?

    3. How could prediction lead to better economic decision making?

    Summary and Reflection


    Directions: Summarize the main ideas of this lesson by answering the question below.

    1. How can we manage the problem of scarcity?

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