Economics is a SOCIAL SCIENCE, which,

like other sciences, is concerned with the

explanation and prediction of observed
phenomena. Economics studies the way in
which societies solve the fundamental
problem of reconciling unlimited desires of
individuals with scarce resources, susceptible
to numerous alternative uses.

-Molina and Nadal (2020)

 Economics is also an APPLIED SCIENCE
because it uses the scientific method in its
explanations, which consists of observing
reality and presenting questions and problems
to arrive at the formulation of theories and
modes.
As an applied science, it follows a
systematic procedure to solve issues and
problems of the society.
Fields of economics
1. Microeconomics
2. Macroeconomics
1. Consumer goods
- Goods for the
ultimate
consumption of the
consumers.
Example: toothpaste, bath soap,
etc.
2. Essential goods
- Used to satisfy the
basic needs of man
Example: foods and medicine
3. Economic goods
- Goods which are
useful and scarce;
with value attached
to them and a price
has to be paid for
their use.
Example: aircon
4. Capital goods or
industrial goods
Used in the
production of other
goods and
services.
Example: buildings, machinery,
equipment
4. Capital goods or
industrial goods
Used in the
production of other
goods and
services.
Example: buildings, machinery,
equipment
Luxury Goods
Goods man may
do without, nut may
give comfort and
satisfaction.

Example: perfume, cakes,

chocolates, expensive cars
Factors of Production
•
•
•
•
 Land
- Natural resources
available to create
supply such as raw
materials that comes
from the ground
 Labor
Is the work done by people –
education, skills, and motivation
and productivity.
Productivity measures how
much each hour of worker time
produces in output.
Workforce receives wage for
his labor.
 Capital
- The money that
companies used to buy
resources; man-made
objects like machinery,
equipment, and chemicals
that are used in production
 Entrepreneurship
Develops an idea into a
business. An entrepreneur
combines the other three
factors of product to add to
supply. The most
successful entrepreneurs
are innovative and risk-
takers.
 1. Scarcity
Insufficient resources to
supply all the desires
and needs of individuals
In the production of goods and services, there are
issues that economics may encounter, these include:

- inadequate land and

natural resources
Land - Polluted areas
- Overcrowded spaces
 - Unskilled workforce
Labor - Mismatch of jobs

- Low quality of
Capital equipment/machines
- Insufficient fund/capital
 - Inadequate training of
Entrepreneurship entrepreneurs
- Limited opportunity
- Scarcity of great ideas
but many competitors in
the market
 2. Multiple Use
Resources can have more than
one possible use.
Example: a plot of a land can be used to
plant coffee or to build a factory
 3. Partially
replaceable
One resource can replace another
in the production of a good or
service
Example: replace manual labor to
technology