1. Revisiting
Economics as a
Social Science
Lesson 1
Applied Economics

2. Specific Objectives
1. Define economics
2. Determine the importance of economics
3. Describe the nature of economics

3. Economics
Study of what constitutes rational human
behavior in the endeavor to fulfill needs
and wants
Understanding how society allocates its
scarce resources
Almost always, human activities involve
economics

4. OF
ECONOMICS
FROM
DIFFERENT
PERSPECTIVES

5. 1. Fajardo
2. Nordhaus
Economics – is the proper allocation and
efficient use of available resources for the
maximum satisfaction of human wants
Economics – is the science of choice. It
studies how people choose to use scarce
resources to produce various commodities

6. 3. Sicat
2. Webster
Economics – is a scientific study which
deals with how individuals and society
may general choices
Economics – branch of knowledge that
deals with production, distribution and
consumption of goods and services

7. ECONOMICS IN A
PROCESS
Unlimited
wants
Scarcity
Make
Choices

8. Economic activities
Earning money
Buying goods and services
Depositing and withdrawing
money in bank

9. Economics from
“Oikanomia”
Household
Management

10. Science
Social
Science
Economics

11. Economics is classified as a social
science because it deals with the
study of human’s life and how he
lives with other men.

12. ECONOMICS
Macroeconomics
Microeconomics

13. Macroeconomics
 Deals with the economic behavior of the
whole economy or its aggregates
(composed of individual units)
AGGREGATES
Business Government
Households

14. Macroeconomics
Discusses the following:
- Gross national product
- Level of employment
- National income
- General level of prices
“EMPLOYMENT AND
INCOME ANALYSIS”

15. Microeconomics
Deals with the economic
behavior of individual units
such as:
Consumers
Firms
Landowners

16. Microeconomics
 Discusses the following:
- Price of rice
- Number of workers in a certain firm
- Income of Mr. Fu
- Expenditures of PLDT
“PRICE THEORY”

17. Divisions
of
Economics
Production
Distribution
ExchangeConsumption
Public
Finance

18. Divisions of Economics
1. Production – refers to the process of producing or
creating goods needed by the households to satisfy
their needs
Factors of production – inputs
Goods and services – outputs
Factors of Production

19. Goods

20. Services

22. Divisions of Economics
1. Production – refers to the process of producing or
creating goods needed by the households to satisfy
their needs
Factors of production – inputs
Goods and services – outputs
2. Distribution – refers to the marketing of goods and
services to different economic outlets
3. Exchange – refers to the process of transferring
goods and services to a person in return for something
present medium of exchange - money

23. Divisions of Economics
4. Consumption – refers to the proper utilization of
economic goods. However, goods and services could
not be utilized unless you pay for it. Hence, consumption
could also be spending money for goods and services
5. Public Finance – pertains to the activities of the
government regarding taxation, borrowings and
expenditures. It deals with the efficient use and fair
distribution of public resources.

24. ECONOMIC
RESOURCES
Factors of production or inputs
Land
Entrepreneurs
Labor
Capital
Foreign
exchange

25. 1. Land
These resources consist of free gifts of nature
which includes:
- soil
- rivers
- lakes, oceans
- forests
- mountains
- mineral resources

26. 1. Land
Land is considered an economic resource because it
has a price attached to it.
* we usually pay for it through rent or lease
Land is a limited resource. Physical
land is a fixed resource.

27. 2. Labor
Also called “human resources”
Labor- refers to all human efforts, be it mental or
physical, that help to produce satisfying goods
and services
In return, he earns an income in forms of wages
and salaries

28. 2. Labor
Labor is a flexible factor of production
- workers can be allocated to different areas of
the economy for producing goods and services

29. 3. Capital
Two economic definitions of capital:
a. Capital – can represent the monetary
resources use to purchase natural resources
Ex: Companies use capital to buy land and
other goods

30. 3. Capital
Two economic definitions of capital:
b. Capital – represents the major physical assets
individuals and companies use when producing
goods and services
Ex: buildings, vehicles, equipments
Income derived from capital is interest

31. 4. Entrepreneurs
French word which means “enterpriser”
Entrepreneur – organizer and coordinator of
other factors of production: land, labor and
capital.
He uses his initiative, talent and
resourcefulness to create economic goods.

32. 5. Foreign Exchange
Refers to the dollar and dollar reserves that the
economy has.
Foreign exchange is part of economic resources
because we need foreign currency for international
trading and buying materials from other countries
International medium - dollar

33. QUIZ

34. LET’S TEST
OURSELVES!
1. Economics is derived from the Greek word
“oikanomia” meaning:
a. Economic management
b. Household management
c. Social management
1 point

35. LET’S TEST
OURSELVES!
2. Economics is a social science because it
deals with:
a. Human nature
b. Natural resources
c. Experimentation
1 point

36. LET’S TEST
OURSELVES!
3. Scarcity of resources means:
a. minimum resources
b. excess resources
c. shortage of resources
d. no resources
1 point

37. LET’S TEST
OURSELVES!
4. These are examples of human wants except:
a. smartphone
b. perfume
c. watch
d. clothing
1 point

38. LET’S TEST
OURSELVES!
5. Give your definition of
economics
2 points

39. Identify what type of
economics (Macro or Micro)
discusses the ff:
1. Gross National Product
2. Price of bananas
3. Profits of Bread and Butter
4. Employment
1 point per item