Module 1

Lesson 2

THE NATURE AND SCOPE OF

ECONOMICS

HOMAPON HIGH SCHOOL – SENIOR HIGH SCHOOL

Subject Title: APPLIED ECONOMICS
Teacher: ROMMEL U. QUIÑONES
 PRE-TEST
I. True or False: Carefully read each sentence and
determine if the sentence is true or if the
sentence is false.
1. Economics comes from the Greek word
oikonomia which means household chores.
2. Economics is considered a field of social
science.
3. Economics is relevant because it is part of
everybody’s life.
4. There are three (3) divisions of Economics,
the microeconomics, the macroeconomics
and the home economics.
5. As a science, Economics is related to other
sciences.
ACTIVITY

In front of you are candies that

you could get and eat. Come on,
everybody is invited to get
candies. Do not be shy… 
ANALYSIS

 What happened when you were

invited to get candies? State
your observation.
Let us define Economics
 Using
the words written on the board,
how would you define Economics?

?
ECONOMICS AS DEFINED

From the Greek words Oikos meaning household

and nomos meaning management
= household management

ECONOMI
CS

The wise production and use of wealth to

meet the demands or needs of the people
 ECONOMICS IN OUTLINE

 Economics is derived from two Greek words

 Oikos- a house

 Nemein- to manage

 Means “managing an household”

DEFINITIONS

ADAM SMITH (1723 - 1790),

Father of Economics
 Book “An Inquiry into Nature and Causes of
Wealth of Nations” (1776)
 defined ECONOMICS as the practical
science of production and distribution of
wealth.
 In this definition wealth is given the first
place and man is given the second place
DEFINITIONS
ALFRED MARSHALL (1842 - 1924)
 book “Principles of Economics” (1890)
 defined “Political Economy” or Economics
is a study of mankind in the ordinary
business of life;
 it examines that part of individual and
social action which is most closely
connected with the attainment and with
the use of the material requisites of well
being”.

DEFINITIONS
LIONEL ROBBINS (1932 -)
 book “An Essay on the Nature and
Significance of Economic Science” in 1932.
 According to him, “economics is a science
which studies human behaviour as a
relationship between ends and scarce
means which have alternative uses”
 Ends – human wants
 Means – resources with which wants are
fulfilled
DEFINITIONS

Prof. PAUL SAMUELSON

 defined economics as “the study of how
men and society choose, with or without
the use of money, to employ scarce
productive resources which could have
alternative uses, to produce various
commodities over time, and distribute them
for consumption, now and in the future
among various people and groups of
society”
SCHOLARLY DEFINITIONS
 Roger Le Roy Miller (Economics, Today and
Tomorrow)
“Economics concerns situations in which choices
must be made about how to use limited
resources, when to use them and for what
purposes. Resources can be defined as the things
people use to make the commodities they want.”

 Hall and Loeberman (Macroeconomics: Principles

and Applications)
“The study of choice under the condition of
scarcity”
SCHOLARLY DEFINITIONS

 Bernardo Villegas (Guide to Economics for

Filipinos)
“A social science that studies and seeks to
allocate scarce human and non-human resources
among alternatives in order to satisfy unlimited
human wants and desires.”

 Gerardo Sicat (Economics)

“a scientific study which deals with how
individuals and society make choices,”
 COMMON WORDS AMONG
DEFINITIONS
 Scarcity- a situation wherein the amount of
something available is insufficient to
satisfy the desire for it.
 Resources - The labor, capital, land and
natural resources and entrepreneurship
that are used to produce goods and
services.
 Unlimited – without limits, infinite
 Wants – desires
FINALLY…

 ECONOMICS – is a social science that

deals with how people organize
themselves in order to allocate scarce
resources in order to produce goods
and services that will satisfy the
unlimited and multiplying wants and
needs of man.
CONCERNS OF ECONOMICS
 ECONOMICS is concerned with
PRODUCTION
Production is the use of inputs to
produce outputs.
Inputs are commodities or services that
are used to produce goods and services.
Outputs are the different goods and
services which come out of production
process.
Society have to decide what outputs
will be produced and in what
quantity
CONCERNS OF ECONOMICS
 Economics is concerned with
DISTRIBUTION
Distribution is the allocation of the total
product among members of society. It is
related to the problem of for whom goods
and services are to be produced.
 Economics is concerned with
CONSUMPTION
Consumption is the use of a good or
service. Consumption is the ultimate end
of economic activity. WHEN THERE IS NO
CONSUMPTION, THERE WILL BE NO NEED
FOR PRODUCTION AND DISTRIBUTION.
HISTORICAL DEVELOPMENT
OF ECONOMICS
 DIVISIONS OF ECONOMICS
ECONOMICS
MACROECONOMICS
General, economy as a whole
Deals with the economic
behavior of the whole economy
or its aggregate such as
government, business,
unemployment, inflation and
the like.
Refers to management of
income, expenditures, wealth or
resources of a nation.
MICROECONOMICS
Specific
Deals with the economic
behavior of the
individual units such as
consumers, firms, the
owners of factors of
productions
 THE SCOPE OF ECONOMICS
Microeconomics is
Macroeconomics is
the branch of
the branch of
economics that
economics that
examines the
examines the
functioning of
economic behavior of
individual industries
aggregates —
and the behavior of
income, output,
individual decision-
employment, and so
making units —that
on —on a national
is, business firms and
scale
households.
 The Macroeconomics and Microeconomics Outline
Production Prices Income Employment

Microeconomic Production/ Price of Distribution of Employment by

s Output in Individual Goods Income and Individual
Individual and Services Wealth Businesses &
Industries     Industries
and Price of medical Wages in the
Businesses care auto Jobs in the steel
  Price of gasoline industry industry
How much Food prices Minimum Number of
steel? Apartment rents wages employees in a
How many Executive firm
offices? salaries
How many Poverty
cars?
Macroeconomic National Aggregate Price National Employment
s Production/O Level Income and
utput   Total wages and Unemployment
  Consumer prices salaries   in the Economy
Total Producer Prices  
Industrial Rate of Inflation Total corporate Total number of
Output profits jobs
Gross Unemployment
Domestic rate
Product
Growth of
Output
ECONOMICS AS A SCIENCE
 Is a science because it is an organized body
of truth, coordinated, arranged and
systematized with reference to certain
general laws and principles.(Observation,
Formulation of theories, Gathering of data, Experimentation,
Conclusion, Generalization)

 Economic analysis seeks to explain

economic events using some kind of logic
based on a set of systematic relations.

 It is a social science because the subject

matter of economics is people or societies
Relations of Economics to
other Sciences
 POST TEST
I. True or False: Carefully read each sentence and
determine if the sentence is true or if the
sentence is false.
1. Economics comes from the Latin word
oikonomia which means household
management
2. Economics is considered a branch of social
sciences.
3. Economics is relevant because it is part of
our way of life.
4. There are three (3) divisions of Economics,
the microeconomics, the macroeconomics
and the home economics.
5. As a science, Economics is related to other
ESSAY

Is Economics a science?
Explain why if “yes” or why not if “no”