LEARNING MODULE FOR JUNIOR HIGH

SCHOOL LEARNERS
NAME : _________________________________
YEAR & SECTION : _________________________________

SUBJECT: APPLIED ECONOMICS 11

WEEK: 1
DATE: JULY 13-15, 2020
TIME: 8:00-9:00 and 1:00-2:00 PM
TEACHER: LELETH ENOJARDO-VALDEZ

LEARNING COMPETENCIES:
 Differentiate economics as social science and applied science in terms of nature
and scope.

 For Online
 Refer to Google Classroom
 For Offline

MOTIVATION :

ACTIVITY 1

INSTRUCTIONS:
 Look at the pictures then you will identify what is the picture all about
 Explain your answer with minimum 5 sentences
 Write your answer in the box

Answer this Activity 1

 Based from the picture, what is fundamental economic problem?

 Why is this problem always arising?
 What must people do to avoid this problem?

Discussion
Economics
DEFINING ECONOMICS
Economics refers to the effective management of scarce resources to satisfy unlimited
human wants and needs. It is a social science that studies the means by which individuals,
groups, and societies produce, distribute, and consume products and services.
The origin of the study of Economics is traced to Adam Smith who wrote the book An
Inquiry into the Nature and Causes of the Wealth of Nations in 1776 and started the idea of
Economics as a separate source of knowledge from Philosophy. He outlined the thought that
society is based on interdependence among people. The underlying interconnection, according to
Smith, is the movement of goods and services in relation to the needs and wants of people.
Individuals have needs and wants that they have to fufill, and these ultimately influence their
decisions and actions as well as other aspects of human life such as professions, lifestyles, and
social interactions.
As the modern economy is primarily defined by knowledge and technology, the conventional
definition of Economics which focuses on matching scarcity and wants is challenged by the
need for better organization to effectively address scarcity and human wants. As such,
economists recognize the infuence of incentives, choices, and rules in managing an economy.
This requires the free flow of information which will give way to effective decision-making and
organization.
Applying this perspective on the issue of traffic, we can see various ways that Economics
can help us understand and address it. For one, the mismatch between the availability of paved
roads and the need for additional roads brought about by the increased number of vehicles is one
factor which brings about traffic. Another aspect of traffic is road management and traffic rules.
The inconsistent implementation of traffic rules andTffe lack of information regarding road rules
are also contributing factors to traffic. One possible solution to entice motorists to comply with
traffic rules is giving incentives to motorists who have not committed traffic violations in a year
such as discounts on vehicle registration fees.
REVISITING ECONOMICS AS A SOCIAL SCIENCE 3
 Basic Economic Concepts
Scarcity
Scarcity is a fundamental concept of economics. It refers to the limitation of resources,
particularly economic resources such as land, labor, capital, and entrepreneurship. Throughout
our lives, we experience the reality of scarcity in various situations, particularly when availing of
products and services. You may have noticed that certain fruits are only available in the market
during certain months. In the months that these fruits are “in season,” they are considered
abundant; but in the months that they are not in season, they are considered scarce. You would
have loved to watch your favorite band perform live but when you went to buy the tickets, these
have been sold out. You and your friends may find it difficult to get a table in a crowded
restaurant, thus, you have to wait for several minutes before you can all be seated. Scarcity
results in challenges with regard to properly allocating these resources to all sectors of the
economy.

Why is it important to teach students about opportunity cost, scarcity, and choice in the K-12
classroom? These concepts can be thought of as the core of capable decision-making. If we teach
our students, beginning at an early age, the critical thinking skills to analyze problems and make
informed decisions about their use of time and money, they are likely to be better students, save
more over their lifetimes, and choose life paths that result in higher standards of living. As schools
look to teach their students more about personal finance topics such as budgeting and saving,
equipping students with a strong understanding of opportunity cost, scarcity, and choice is
essential.
Teaching these concepts from an early age — as a progression from kindergarten through senior
year in high school — is important. In the lowest grades, students can identify two alternatives, the
choice they would make between them, and the opportunity cost of their decision. In upper
elementary school, students can use the PACED decision-making model to decide between more
than two alternatives. In the PACED model, students learn to identify the problem (P) or decision
they have to make, list the alternatives (A) available to them, identify a set of criteria (C) they can
use to evaluate the different alternatives, evaluate (E) the alternatives based on the criteria, and
make a decision (D) between the alternatives. The students are then asked to identify the
opportunity cost — the next best alternative — of the choice they made.
By middle and high school, students should be able to identify more complex opportunity cost
problems and make use of a production possibilities curve to show how production in a two-good
economy is allocated. Discussions of opportunity cost in the high school classroom can be used to
address pressing current events. For example, you might ask your students to assess this situation:
driving five miles to a gas station that sells gasoline for 5 cents cheaper or going to the gas station
around the corner. They can discuss how to identify the opportunity cost associated with buying
the cheaper gas. When looking at environmental issues, you can ask your students to research
municipal recycling programs and identify the opportunity cost associated with a town’s adopting a
mandatory recycling program.
The connections with personal finance issues are some of the most important contexts in which
students can use opportunity cost. Teaching middle and high school students to budget and make
realistic spending decisions are important. Doing so also lends itself well to discussions of
opportunity cost and choice. Most household budgets require individuals and the household to
make tradeoffs between different things on which to spend household income. With sound
decision-making skills that are well grounded in the concept of opportunity cost, our young people
can be expected to make more thoughtful budget decisions as they go off to college and the world
of work.
Unlimited Human Wants and Needs
The concept of scarcity is coupled with the fact that human wants and needs are unlimited.
Economics defines needs as things that are desired which are essential for human survival, while
wants are those that are desired but are not essential for survival.
If you were to list the things that you want to buy, own, and do in life, that list would be
endless. As we fulfill or meet one need or want, we immediately look to meet another need or
want, and so on. For example, waking up in the morning you immediately think of what you
want to have for breakfast. After taking your breakfast, you begin to think of what you want to
have for lunch. While eating lunch, you are already thinking of what you want to have for
dessert. Then you start thinking of afternoon snacks, and eventually, dinner. All of our daily
actions are defined by meeting a series of needs and wants.
Another aspect of human wants and needs is the rapidly changing tastes and preferences
which are actually the result of the equally rapidly developing technology. You may have bought
a new shirt this week, but after a month, you start to think of buying a new one because you no
longer like the color or design of the shirt you have bought. You may consider your smartphone
to be functional and attractive, but as soon as a new model is released in the market, you begin to
think of replacing your phone with the new model.

Economic Resources and Factors of Production

Land refers to all natural resources that exist without man’s intervention. It encompasses all
things derived from the forces of nature such as air, water, forests, vegetation, and minerals. The
payment for land is called rent.
Labor refers to human inputs such as manpower skills that are used in
transforn^niffesources into different products that meet our needs. The payment for labor is
called wages and salaries.

4 INTRODUCTION TO APPLIED ECONOMICS

 Capital is a man-made factor of production used to create another product. Examples are
machinery and equipment used in manufacturing companies. The payment for capital is
interest.
Entrepreneurship is the factor of production that integrates land, labor, and capital to create
new products. An entrepreneur is an individual who makes the decisions with regard to
production and utilizing the other factors of production. A successful entrepreneur not only
creates new products - he or she also innovates by improving on old ones.
These four factors of production are considered to be scarce or limited. It does not mean we
cannot produce more of these; rather, the availability of these resources is defined by our
unlimited needs and wants. For example, despite having numerous agricultural farms in our
country, their production cannot adequately keep up with the demands of a growing population.
This creates a scarcity of resources, particularly in agricultural and food items. The finite nature
of land, labor, capital, and entrepreneurship consequently makes their scarcity, on top of our
unlimited human wants and needs, a universal and perpetual phenomenon.

The Basic Economic Questions and Economic Systems

Since the scarcity of resources is central to the study of economics, it is necessary to properly
allocate these resources to meet peoples unlimited wants. This process of allocation answers
three economic questions: What to produce? How to produce? For whom to produced
1. What to produce?
A society determines the kind and quantity of products it will produce depending on what
the consumers want to buy or are willing to pay for.
2. How to produce?
A society decides who will produce goods and what process of production will be used.
Goods may be produced by corporations, small business-owners, or the government
itself. The process of producing goods may be addressed depending on the costs and the
availability of resources needed.

3. For whom to produce?

The question revolves around the issue of who will benefit from the goods and services
produced. This depends on the distribution of wealth in a particular society. Therefore, a
consumer who has the capacity to pay for certain goods and services is more likely to
benefit than one who cannot afford them.
The answers for what, how, and for whom to produce are influenced by the structure of a
society’s economic system. An economic system is characterized by the type of institution
responsible for the management and allocation of resources used in the production of goods and
services. Generally, there are three known economic systems, namelj^js^-ket economic system,
command economic system, and mixed economic system.

REVISITING ECONOMICS AS A SOCIAL SCIENCE 5

 A market economic system is where all economic resources are owned by private
entities. This system proposes the following answers to the three economic questions: 1)
produce goods that yield high profits; 2) produce at maximum efficiency with minimum costs;
and 3) distribute the goods to those who can afford to buy them.
A command economic system is where all resources are owned by the government. The
question “What to produce?” is answered by producing more public goods like roads, public
schools, and public hospitals. The question “How to produce?” is answered by employing all
possible laborers and using available machinery and equipment. The government answers the
final question by producing for the public.
Lastly, the mixed economic system is where all three questions are answered by both the
government and private entities in consideration of their mutual benefit. Economic resources are
owned by both. Today, most countries apply this type of economy but in different proportions—
some countries employ an economic system which is more command-oriented than
marketoriented, while others have a more market-oriented economic system.

Decision-making and Rationality

The reality of scarcity means that people have to make choices with regard to the resources
that they wish to use or avail of. Decision making, therefore, is an important aspect of
economics. An important part of economic study is determining how individuals or groups of
individuals will behave given certain changes in the economy. Economics uses the concept of
rationality to predict the actions of people. Rationality is defined as the assumption that
individuals are consistent and logical in their decision-making, and that they seek an outcome
that is most beneficial to them. Economists assume that individuals make decisions rationally
and that it is possible to predict certain behavioral outcomes. The rationality test is one means of
illustrating the concept of rationality. For example, if a person prefers mango over banana, and
banana over guava, then it is highly likely that he or she prefers mango over guava. Given this
preference, when this person is faced with a choice between buying a guava shake and a mango
shake, he or she would choose to buy the mango shake.

Opportunity Cost and Trade-off

One of the evident effects of scarcity is opportunity cost. This refers to the cost of giving up
an alternative by selecting the second best choice. When resources are scarce or limited,
consumers are compelled to choose how to manage them efficiently and decide how much of
their wants or needs will be satisfied and how much of them will be left unsatisfied. Hence,
when a particular need is pursued, all the other alternatives are forgone. And the more we have
of a particular good, the more we sacrifice other things.
One example is when you buy a can of soda. The opportunity cost of buying corresponds to
all other items that can be bought with the same amount. Let us say that a can of soda costs 30
pesos. With 30 pesos you can buy other equivalent products such as a can of fruit juice or a
bottle

6 INTRODUCTION TO APPLIED ECONOMICS

 For Online and Offline
Day 1 (Monday)

APPLIED ECON
ECONOMICS
QUIZ 1.1
Name :_______________________________________ Score :_____________________
Grade & Section: ______________________________ Date :______________________

I ( 5 points each )

5 Examples of Relative scarcity 5 examples of Absolute scarcity

II ESSAY. Minimum of 6-7 sentences ( 5 points each )

1. Why is economics deeply rooted in the concept of scarcity?

2. In what way is applied economics important in tackling economic issues or problems of the
country?
 For Online and Offline
Day 2 (Wednesday)
APPLIED ECON
ECONOMICS
QUIZ 1.2
Name :_____________________ Date :______________
Grade & Section:____________ Score :_____________

I. CREATING ( 10 points each )

1. Make a poster that shows economic scarcity in the country? Elaborate your drawing with a
minimum of 6 sentences.