APPLIED ECONOMICS

Economics as Applied
Science
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED SCIENCE

Objectives
At the end of the lesson, the learner is expected
to:
define basic terms in applied economics
 differentiate economics as social science and
applied science
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

What is Applied Science?

• Applied science is a discipline of science that applies
existing scientific knowledge to develop more
practical applications, like technology or inventions.
• Within natural science, disciplines that are basic
science, also called pure science,
develop information to predict and perhaps explain—
thus somehow understand—phenomena in the natural
world. Applied science applies science to real world
practice.
ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Economics as an Applied Science

• As social science, economics deals with the analysis on how
members of a society interact with one another on the
creation and utilization of wealth. Thus, economics is a
science of choosing from alternative options that will yield
the highest benefits to society in the context of competing
uses and opportunity costs.
• However, the study of economics has been perceived as too
theoretical since it deals with the principles, laws and
assumptions governing human behavior in the allocation
process.

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Economics as an Applied Science

• As social science, economics deals with the analysis on how
members of a society interact with one another on the
creation and utilization of wealth. Thus, economics is a
science of choosing from alternative options that will yield
the highest benefits to society in the context of competing
uses and opportunity costs.
• However, the study of economics has been perceived as too
theoretical since it deals with the principles, laws and
assumptions governing human behavior in the allocation
process.

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Applied Economics
• Applied Economics is the application of economic
theory and econometrics in specific settings. As one
of the two sets of fields of economics (the other set
being the core), it is typically characterized by the
application of the core, i.e. economic theory and
econometrics. The process often involves a
reduction in the level of abstraction of this core
theory
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Keynes’ Discussion
• He discussed the uses of the phrases applied political economy and applied
economics noting three different uses:
1. in the sense suggested in the text [in association with the art of
political economy];
2. to designate the application of economic theory to the interpretation
and explanation of particular economic phenomena, without any
necessary reference however, to the solution of practical questions;
3. to mark off the more concrete and specialized portions of economic
doctrine from those more abstract doctrines that are held to pervade
all economic reasoning. (1917, 58–59) and applying theories of
economy on what we have in reality to get a healthy enterprise and
business prosperity.
ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Problem and Application:

Suppose that there is a sudden new trend for
high school students all over the Philippines to
ride bicycles more. How would the price system
decide “who should get what is produced?” How
would the inputs used in bicycle production be
affected?
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Activity: Economics as Science

Applied
Economics
Economics

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Quiz: Essay
How does Applied Economics affect the daily
lives of the Filipinos?

ABM_AE12
APPLIED ECONOMICS
ECONOMICS AS AN APPLIED ECONOMICS

Reference:
• Tullao Jr., Tereso S. Applied Economics For A
Progressive Philippines. Phoenix Publishing House;
927 Quezon Ave., Quezon City. 2016
• Pagoso, Cristobal M. Philippine Economics (Macro
Approach). NELSON PUBLICATION; Marimar
Village Paranaque City. 2003
• Carnaje, Gideon P. Applied Economics. Vibal Group
Inc, Araneta Avenue, Quezon City. 2016
Economic Problems:
Once the country identifies the type
of economic system, they have to
address their economic questions.
1. What goods and services to
produce? – identifying the
necessity, what really the economy
needs? In this pandemic for
example, the economy has to
choose between the production of
mask or rice.
2. How do things are produce? - Referring
to the techniques on the production of the
good or service. Say for example, if the
economy chooses to produce mask due to
COVID-19, then the economy has to
determine on the manner or process of
producing it.
3. For whom things are produce? –
consuming the good and how much of it is
to produce. Identifying the factor markets
which is the land, labor and capital in order
to sustain the demand and supply in the
economy. Determining factor is the price.
IDENTIFICATION: Identify which of the following is most
appropriately a microeconomic or macroeconomic issue.
Write your answer on a separate sheet of paper.
1. Determination of GDP and GNP in the economy
2. Determining the prices in the individual market
3. Study of the relationship between inflation,
unemployment and purchasing
power
4. Consumers behavior in the economy
5. Production and costs analysis in the manufacturing
firms
6. Operation of individual markets
7. Impact of fiscal debt during this pandemic
8. Study of individual behavior
9. General level of rice prices in this pandemic
10. Total number of workers employed and unemployed in
the Philippines
during the Asian crisis