AppiedEcon-Q1-Week-1PDF.pdf

APPLIED ECONOMICS NATURE AND SCOPE OF ECONOMICS  LESSON OBJECTIVES: 1. Differentiate economics as social and applied science terms of : a. nature and scope; b. different applications of economics 2. Apply economics as social and as an applied science in real life situations. REVISITING ECON...

APPLIED ECONOMICS NATURE AND SCOPE OF ECONOMICS  LESSON OBJECTIVES: 1. Differentiate economics as social and applied science terms of : a. nature and scope; b. different applications of economics 2. Apply economics as social and as an applied science in real life situations. REVISITING ECONOMICS Three (3) strands in the development of the definition of economics 1. Wealth 2. Decision- making 3. Allocation Process  ECONOMICS Economics as a study of wealth implies wealth utilization for individual’s satisfaction and society’s welfare Jeremy Bentham  ECONOMICS IS…  A Social Science  An Applied Science  ECONOMIC AS A SOCIAL SCIENCE Economics is a SOCIAL SCIENCE concerned with the explanation and prediction of observed phenomena in the society. Molina, J. A. & Nadal, G. J I (2020)  ECONOMIC Economics studies the way in the societies solve the fundamental problems of reconciling the unlimited desires of individuals with scarcity of resources, susceptible to numerous alternative uses ECONOMIC AS A APPLIED SCIENCE As an applied science, it follows a systematic procedure to solve issues and problems of the society. ECONOMIC AS A APPLIED SCIENCE Economics is also an APPLIED SCIENCE because it uses the scientific method in its explanations, which consists of observing reality and presenting questions and problems to arrive at the formulation of theories and models. DIRECTIONS : MAKE A TABLE ILLUSTRATING THE DIFFERENCES OF ECONOMICS AS A SOCIAL AND AS AN APPLIED SCIENCE. -Systematic -Formulation of Systematic Systematic material wealth Formulation of material Application of theories -Application of wealth and principles theories and principles Human Interaction Theories in practice -Theories in practice -Human interaction Review of potential -Review of potential outcomes outcomes  FIELDS OF ECONOMICS 1) Microeconomics- focuses on the behavior of individual economic units and the functioning of markets.  FIELDS OF ECONOMICS 2) Macroeconomics- studies the functioning of economics as an aggregate.  MICRO VS MACRO MICROECONOMICS MACROECONOMICS 1. Studies of markets of good 1. Studies the economy as a and services whole 2. Focuses of the behavior of 2. Focuses on aggregate individual in the market indicators (such as 3. Explains how and why production, employment, these units make etc.) economic ECONOMIC AGENTS/STAKEHOLDERS 1) Consumers 2) Producers 3) The public Sectors ECONOMIC AGENTS/STAKEHOLDERS Consumers  Consume goods and services /offer production factors  Maximize utility ECONOMIC AGENTS/STAKEHOLDERS Producers  Produce goods / demand productive factors  Maximize profit ECONOMIC AGENTS/STAKEHOLDERS The public sectors  Attempt to maximize the well- being of society  KINDS OF GOODS COSUMER GOODS Goods for the ultimate consumption of the consumer  KINDS OF GOODS ESSENTIAL GOODS Used to satisfy the basic needs of man  KINDS OF GOODS CAPITAL GOODS or INDUSTRIAL GOODS used in the Example: production of other buildings, machinery, goods and services equipment.  KINDS OF GOODS LUXURY GOODS goods man may do Example: without, but may give perfume, cakes; comfort and chocolates, satisfaction expensive cars..  KINDS OF GOODS ECONOMIC GOODS goods which are useful and scarce; with value attached to them and a price has to be paid for their use. If Example: a good is so abundant and it can The air is free, but satisfy everyone’s needs without anybody the air from an aircon paying for it, is an economic good. then, that good is free. ECONOMIC RESOURCES OR FACTORS  Land as a Factor of Production  Labor as a Factor of Production  Capital as a Factor of Production  Entrepreneurship as a Factor of Production  Natural resources available to create supply such as raw materials that comes from the ground. It can be a non-renewable resource; commodities such as oil and gold; and renewable LAND resource, such as timber.  the work done by people- education, skills, and motivation and productivity. LABOR  The money that companies used to buy resources; manmade objects like machinery, equipment, and chemicals that are CAPITAL used in production.  They develops an idea into a business. An entrepreneur combines the other three factors of production to add to supply. CHARACTERISTICS OF RESOURCES 1) Scarcity: insufficient resources to supply all the desires and needs of individuals. 2) Multiple use: Resources can have more than one possible use. 3) Partially replaceable: one resource can replace another in the production of a good or service.