APPLIED ECONOMICS

Introduction to Economics
JASMIN MAE RIVERO
SPECIAL SCIENCE TEACHER I

FEBRUARY 15, 2023

 SUBJECT DESCRIPTION
This course deals with the basic principles of applied
economics, and its application to contemporary economic
issues facing the Filipino entrepreneur such as prices of
commodities, minimum wage, rent, and taxes. It covers
an analysis of industries for identification of potential
business opportunities. The main output of the course is
the preparation of a socioeconomic impact study of a
business venture.
 ECONOMICS
Is the social science
that involves the use
of scarce resources
to satisfy unlimited
wants.
 ECONOMICS
It is the use or allocation
of scarce resources to
meet man’s unlimited
needs and wants.

- Richard Lipsey
 SCARCITY
The most basic economic
problem: the gap between
limited resources and
theoretically limitless wants. It is
a condition where there are
insufficient resources to satisfy
all the needs and wants of a
population
 TWO TYPES OF SCARCITY
ABSOLUTE SCARCITY RELATIVE SCARCITY
• Insufficient quantities of a • A good is scarce compared to
resource to meet human its demand – rising demand
needs or wants. • Physical quantities of a
• Supply is limited. resource are present, but
scarcity exists because of
problems with supply or
distribution.
 TWO TYPES OF SCARCITY
ABSOLUTE SCARCITY RELATIVE SCARCITY
Examples: Examples:
• Cherries • Oil
• Time • Agricultural Soil
• No food – starvation • Bananas are abundant but
when a typhoon destroys
• No water - drought banana plants, then it will
become relatively scarce.
Because of the presence of
SCARCITY, there is a need
for man to MAKE
DECISIONS.
Why do we have to choose?
 Consumers cannot spend money twice.
Ex. Money spent on a cellphone cannot be spent
again on buying a TV.

 Producers cannot use resources again once they

are used up.
Ex. A farmer who decides to use his land for
producing corn gives up the opportunity to produce
rice.
LAW OF SCARCITY
An economic system cannot
produce all goods and
services that consumers
want, and most consumers
do not have the resources to
purchase everything they
want.
 Since there is
scarcity, we have to
choose…
TRADE – OFF – the exchange or choosing between
alternatives. It is a reality that getting one thing would
mean giving up another thing.
EDUCATION TRAVEL

VS
OPPORTUNITY COST – the value or the cost of the
OPPORTUNITY COST: SALARY
next best forgone choice/alternative.
In other words, opportunity cost represents the benefits that
could have been gained by taking a different decision.
WORKING MOTHER FULL-TIME MOTHER

VS
 Without scarcity, a person
does not need to make
choices since he/she can have
everything he/she wants.