APPLIED

ECONOMICS

Lesson 2
September 5, 2022
 MELCS
Differentiate economics
as social science and
applied science
in terms of nature and
scope
 ECONOMIC
AGENTS/STAKEHOLDERS
Interact among themselves in a specific territorial,
social, natural, and/or cultural framework that
determines their relationships in the market.
 ECONOMIC
AGENTS/STAKEHOLDERS
1. Consumers - Consume goods and services, offer
production factors, maximize utility
2. Producers - Produce goods/demand productive
factors, maximize profit
3. Public sectors - Attempt to maximize the well-
being of society
 BASIC TERMS TO
UNDERSTAND ECONOMICS
GOODS - anything used to satisfy your wants and
needs.
 GOODS
1. Tangible Goods-
material/physical goods or
commodities
 GOODS
2. Intangible Goods - goods in
the form of services such as
those rendered by doctors,
engineers, and other
professionals
GOODS MAY ALSO BE CLASSIFIED
ACCORDING TO USE:
Consumers Goods – goods for the consumption of
the consumers
Essential Goods – used to satisfy the basic needs of
people
Capital Goods or Industrial Goods – used in the
production of other goods and services
 GOODS MAY ALSO BE CLASSIFIED
ACCORDING TO USE:
Economic Goods – goods that are useful; with value
attached to them and has a price to be paid for their
use
Luxury Goods – goods people may live without but
may give comfort and satisfaction
Resources are limited in nature, but human
wants and needs are unlimited, thus, an
efficient allocation of these resources or
factors of production is a big challenge for
every economy.
Economics also helps the entrepreneurs
and the economy to allocate resources in
the production of supplies to meet the
demands of the consumers
Factors of Production
-are inputs combinations in the production
of goods and services to make an economic
profit for the firms.
Factors of Production
Resources are limited in nature, but human
wants and needs are unlimited, thus, an
efficient allocation of these resources or
factors of production is a big challenge for
every economy.
Factors of Production
1. Land - natural
resources available to
create supply such as raw
materials that come from
the ground
Factors of Production

2. Labor - the work done by

people- education, skills, and
motivation, and productivity.
Factors of Production
3. Capital - the money that
companies used to buy
resources; manmade objects
like machinery, equipment,
and chemicals that are used
in production
Factors of Production
4. Entrepreneurship -
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
Characteristics of Resources:

2. Multiple uses - Resources can

have more than one possible use.
Characteristics of Resources:

3. Partially Replaceable - one

resource can replace another in
the production of a good or
service
 Activity 1
Read the scenario, classify the goods mentioned
accordingly in the table.

Activity 1
Your mother went to the market to shop for goods for
the family. She purchased the following goods: canned
goods, bread, sacks of rice, meat, vegetables,
toothpaste, bath soaps, perfumes, wristwatch, aircon
to ventilate her store, and coffee maker for her store.
 Activity 2
Draw a picture that shows the different factors in
production of goods. This will help you become creative
in your analysis of the application of resources you
need in the production of goods that are most needed
in society