APPLIED ECONOMICS
Quarter 3 Module 2
Basic Economic Problems and How Applied
Economics Solves Economic Problems
Objectives:
01 Identify the basic economic problems.
Illustrate how applied economics can be used to solve
02 economic problems.
03 Construct framework to solve the economic problem.
04 Solve problems on economic activities.
ACTIVITY #1: What I Know
Matching Type: Match Set A or the central
economic issues and problems to Set B or the
description of economic issues.
REVIEW:
Part I Multiple Choice. Directions: Kindly
choose the letter of the correct answer. Encircle
your answer.
1. The physical effort of the manpower to produce the basic needs of the
consumers, describes which factor of production?
a) Land b) Capital c) Labor d) Entrepreneur
2. The initiative and creativity to produce something new describes which
factor of production?
a) Land b) Capital c) Labor d) Entrepreneur
3. The equipment of the coffee shop to produce cups of coffee, are what
kind of goods or products?
a)Consumer goods b) Either consumer goods or capital goods
c) Capital goods d) Economic goods
4. Which best of the following best describes economics as a social and
an applied science?
a) The study of products we need to survive
b) The study of how customers make choices when there is unlimited
supply of resources
c) The study of human personalities
d) The study of how buyers make choices when there is limited supply
5. The following are examples of customers’ basic needs.
a) Water and shelter b) Iced tea
c) Laptop and cellular phones d) Expensive bags
Direction: Please match the resources with the statements.
A)Land B) Capital C) Labour D) Entrepreneurship
6. ________________The idea for a car that runs on a rocky road
7. ________________The crude oil used by ABM Firm to produce
gasoline
8. ________________The machine used by Mang Jose, a tailor to stitch
PPEs
9. ________________The manpower to build bridges and houses
10._________________Technicians who repair computers
BRIEF INTRODUCTION
In the article of Forbes Custom (2017), The Philippines: Asia’s New
Economic Powerhouse, the Philippine economy has transformed into one
of Asia’s most dynamic economies on the back of fast-paced Gross
Domestic Product (GDP) growth.([Link]). For the longest time, it
has all the opportunities to sustain its growth and stability.
However, due to the problem on pandemic, at present, it is suffering
from economic depression. The issue of scarcity on supply due to
limited resources, but unlimited wants, is the ultimate economic
problem. Scarcity implies a limited quantity of resources needed in
production.
Guru, S. (2020) mentioned, the main issues on production include the
products to produce; how to produce these products and for whom to
produce the products and how to make the economy grow. Economics,
therefore, is concerned with the allocation of resources to make the
most efficient use of these resources.
The Four Basic Economic Problems
In the article of Guru, S. (2020) Basic Central Problems Faced by an
Economy, there are basic problems common to all economies. In terms
of production, common to all countries is the problem on scarcity. This
arises because the resources are limited and have alternative uses. This
problem gives rise to four basic problems of an economy.
As we said earlier, economics can be a tool to solve these economic
problems. Economists formulate strategic solutions to economize the
problems such as economic growth or the ability to produce goods and
services, reduce expectation or the ability to reduce our wants such as
lessening consumption, and improve the use of resources or the
capacity to use our existing resources wisely.
[Link]
APPLIED ECONOMICS ON
BASIC ISSUES AND PROBLEMS
1. Which of the following is an economic problem?
a. Poverty
b. Unemployment
c. Traffic jam in Big Cities (Manila, Cebu, Davao)
d. All of the above
Economics is deeply rooted with this
problem. It is the source of what we
are experiencing today. Hence,
economics use applied economics
to come-p with a policy to lessen the
risk of the problem.
Economic problem exists
because of imbalances of human
needs and wants.
Resources are limited to suffice
the unlimited desires of the
society.
• Philippines is one of the
competitive countries in the world.
In the past years, the economy
has been increasing and stable.
• According to the study of World
Bank in 2019, the Philippine
economy remains strong and is
projected to grow 5.8% in 2019,
before recovering to 6.1% and
6.2% in 2020 and 2021,
respectively.
UNEMPLOYMENT
As per NCSB Resolution No.15 dated October 20,2004,
unemployed consists of persons in the labor force who are
reported as (1) without work; (2) currently available for work; and
(3) seeking work or not seeking work because of the belief that no
work is available, or awaiting results of previous job application, or
because of temporary illness or disability, bad weather or waiting
for rehire or job recall.
How Economics differ from other discipline like Biology and Chemistry?
Economics studies human behavior just like psychology and
sociology. It studies and how people behave and influence the world
around them.
That is why Economics is a Social Science.
Does Economics theory and concepts can be applied to real-world
situations?
Yes, since Economics studies human behavior how people
behave, its analysis requires the application of certain economic
concepts and tools to understand various economic issues and
problems.
And that is Applied Economics.
Why do we need to study Economics?
A. Will help the students to understand why there is a need to budget
and allocate the use of whatever resources are available.
B. To make rational decisions in spending money, saving part of it and
even investing some of it.
C. Both A and B
Studying Economics help also the students…
To take a look on how the economy operates and decide for
themselves if the government officials and leaders are
effective in trying to shape up the economy and formulate
policies for the good of the nation.
Evaluation
Assessment (Multiple Choice )
Direction: Choose the letter of the correct answer. Encircle your answer.
1. Mrs Nenita De Jesus purchased basic goods like vegetables and groceries for the
consumption of her family. These goods are:
a. Consumers goods b. Capital Goods c. Luxury Goods d. Economic Goods
2. Mr. Dennis Elecanal purchased new car as a gift for his father’s birthday. This good is
a. Consumers Good b. Luxury Good c. Capital Good d. Economic Good
3. ABM Computer shop purchased additional 10 units of computer for the business. These
goods are called:
a. Consumers goods b. Luxury Goods c. Capital Goods d. Economic Goods
4. Which is not considered as tangible good? a. Cell phone b. Mask c. Sack of rice d.
Training service?
a. Cell phone b. Mask c. Sack of rice d. Training service
5. Which is true about Economics as a social science?
a) Scarce resources and limited needs drive choice
b) Economics explains and predicts economic events
c) The scientific method is based on the normative analysis
d) Economic hypotheses lead directly to predictions
e) 6. Which is true on the value of an economic theory in practice? It is determined by
a. how accurate the assumptions are. b. how well the theory can be represented by a
graph.
c. how well the theory can predict or explain. d. how economical the model is.
7. Which of the following is the study of the aggregate economy studied as a whole?
a. Mathematical economic b. Econometrics c. Macroeconomics d. Microeconomics
8. Business ethics refers to any behavior by businesses that may
a. be illegal. b. violate social or moral standards. c. result in the maximization of profits.
d. All of the above.
9. Businesses have responded to incentives for ethical behavior by doing
ALL except
a. lobbying for the abolition of laws that require ethical behavior.
b. appointing “ethics officers” to monitor ethical manners of employees.
c. providing training sessions in ethical behavior for employees.
d. establishing codes of ethical behavior for employees.
10. Which of the following is not an economic agent in your locality?
a. Producer b. Consumer c. Public Sector d. None of ABC