APPLIED ECONOMICS

Ma Theresa Malco, LPT MBA MC

 RECAPITULATION
Differentiate the following terms:
• 1. Positive Vs Normative
• 3. Scare resources vs Infinite desires
• 2. Micro Vs Macro
10 Principles of
Economics
Economic as an Applied Science:
Issues/Concern
 Economics as
a Science
• Models or Theories
– Simplified
representations of
the real
world used as the
basis for
predictions
or explanations
Microeconomics and
Macroeconomics
http://marketbusinessnews.com/financial-glossary/applied-economics/
https://www.slideshare.net/nurdalilaadenan/eco-2023-chapter-1
 GROUP ACTIVITY
1.Trade Off (Skit)
2.Opportunity Cost (Tag line/Poster)
3.Rational People at the margin (TV
Commercial)
4.People respond to incentives
(Example)
5.Trade can make everyone better off
(Radio Commercial)
 GROUP
PRESENTATION
and DISCUSSION
 10 Principles of Economics
• People face trade-offs
Trade off is a situation that
involves losing one quality or
aspect of something in return for
gaining another quality or aspect.
Society faces;

efficiency: the property of society

getting the maximum benefits
from its scarce resources.

equity: the property of distributing

economic prosperity fairly among
the members of society.
 10 Principles of Economics
 The cost of something
is what you give up to
get it

opportunity cost:
whatever must be given
up in order to obtain
some item. or last best
alternative forgone

https://bradleylao.weebly.com/
 10 Principles of Economics

• Rational people think at

the margin
Rational people often make
decisions by comparing
marginal benefits and
marginal costs.

https://mrski-apecon-2008.wikispaces.com/Chapter+1+-+Micro
 10 Principles of Economics

• People respond to
incentives
• A higher price in
market provides an
incentive for buyers
to consume less
and an incentive for
sellers to produce
more.
https://www.adamsmith.org/blog/economics/people-respond-to-incentives
10 Principles of Economics

• Trade makes each of this person

better off. Both got what they
wanted through exchange.
 Question

Does the 1 5 principle of

st

economics solve economic

problems encountered in
daily life? Yes, why? No,
why?
 Formative Assessment:
a. Trade Off b. Opportunity Cost c. People respond to incentives
d. Rational people think at a margin e.Trade can make everyone better

Choose letter of the right answer in the box:

• 1. Competition amongst same brand, services, and products

_____________
• 2. Metro deal vouchers ______________
• 3. Buying a second hand car _______________
• 4. A father chooses to go abroad _________________
• 5. How a family decides to spend its income ______________
 Assigned Task:
Assigned Task:
• Watch TV news regularly
 Tr o s t
People
Trade a d
Rationalrespond
makes People
i t y C to
people
RECAPITULATION
e
better n
incentive
u off
think atrt aOMargin
p o f
Op f
 GROUP ACTIVITY
6. Markets are usually a good way to organize
economic activity (Skit)
7. Governments can sometimes improve market
outcomes (TV commercial)
8. A country's standard of living depends on its
ability to produce goods and services (Radio
Commercial)
9. Prices rise when the government prints too
much money (poster)
10. Society faces a short-run tradeoff between
Inflation and unemployment (Example)
10 Principles of Economics
Markets are usually a good way
to organize economic activity

• Household and firms look at

prices when deciding what
to buy and sell, they
unknowingly take into
account the social costs of
their actions.
• As a result, prices guide
decision makers to reach
outcomes that lend to
maximize the welfare of
society as a whole.
 10 Principles of Economics

• When market fails (break down) government

can intervene to promote efficiency and equity.

https://www.slideshare.net/paaaatgeee/group-mexico-10-principles?qid=40298441-103
f-49d0-9420-cc7ae478be69&v=&b=&from_search=1
10 Principles of Economics

A country's standard of living depends on its

ability to produce goods and services
 10 Principles of Economics
Making the prices of goods
(e.g. bread) increase to
accommodate the big amount
of cash circulating

….. More money

circulates in
the economy

As the government prints more

money to give the people cash ….

Prices rise when the government prints too much

money
10 Principles of Economics

Society faces a short-run tradeoff

between Inflation and unemployment.
 QUESTION:
• What can you say about
the 1 five principles of
st

economics from the last

five in the nature of its
concept?
 Formative Assessment:
a. Markets are usually a good way to organize economic activity
b. Governments can sometimes improve market outcomes
c. A country's standard of living depends on its ability to produce goods and
services
d. Prices rise when the government prints too much money

Choose letter of the right answer in the box:

• 6. Price is a guide by decision makers ______________
• 7. Imposition of laws as to regulation or deregulation
_________________
• 8. GNP VS GDP _______________
• 9. Regulations of money circulation ______________
• 10. The time when it is difficult to find a job ____________
 Assigned Task:
Assigned Task:
• Watch TV news regularly