Republic of the Philippines

Department of Education
REGION IX, ZAMBOANGA PENINSULA
SCHOOLS DIVISION OF ZAMBOANGA CITY
BUENAVISTA INTEGRATED SCHOOL
Buenavista, Zamboanga City
Applied Economics Grade 12
Learning Competencies
1. Define basic terms in applied economics
2. Identify the basic economic problems of the country
3. Explain how applied economics can be used to solve economic problems
Chapter 1
Introduction to Applied Economics
1.1 Revisiting Economics as a social science
1.2 Economics as an applied science
1.3 Basic economic problems and the Philippine socioeconomic development in the 21st
century

LESSON 1- Revisiting Economics as a Social Economics

What is Scarcity?
 Scarcity is the condition in which our needs and wants are greater than our limited resources.
What is Needs?
 Needs and wants differ from person to person. The easiest way to describe needs is that these are the things
that we can’t live without.
What is Wants?
 Needs and wants differ from person to person. The easiest way to describe needs is that these are the things
that we can’t live without.
Why is scarcity linked to Economics?
 Scarcity is the reason why people have to study and practice economics. Economics studies how people
distribute or divide their limited resources in order to satisfy their unlimited wants. Or simply, it is the study of
how individuals and societies deal with scarcity.
What are Trade-offs?
 When making choices, there are things that we need to give up. Tradeoffs consist of all the options that we give
up when we make a choice.
What is an Opportunity Cost?
 Opportunity cost is the highestvalued alternative that must be sacrificed in order to get something else. The
key to making the best possible decision is to minimize your opportunity cost by selecting the option that gives you
the largest benefit.

What are the Branches of Economics?

 Microeconomics is a branch of economics that is concerned with the decision-making done by smaller
economic units such as individuals or consumers, firms and industries. Macroeconomics on the other hand is
the study of the large economy as a whole or the aggregate economy.
What is Supply and Demand?
 To better understand Economics, we also need to know about supply and demand. Supply refers to the total
number of goods or services available for sale. These goods or services are produced by making use of the
factors of production consisting of land, labor and capital. Land refers to all natural resources or any raw
materials coming from the ground that is used to produce supply. Labor on the other hand is the work done by
people or human resources. Capital does not only mean money as this can be in the form of man-made tools or
objects that may be used to produce supplies. Demand on the other hand refers to the aggregate or the totality
 of the needs and wants of the customers. Balancing these two is one of the goal of Economics so that scarcity is
eliminated.
What is Applied Economics?
 Applied Economics is the application of the principles of supply, demand, trade-offs, opportunity-costs, and
other economic theories to solve real-world problems. It may be practiced in the microeconomic or
macroeconomic level. Applying economic theories in our lives means trying to address actual economic issues
and be able to do something about it.

LESSON 2 Economics as an Applied Science

Applied Economics- Applied economics is the application of economic theory to real-

world problems. It uses data, reasoning, and economic principles to make decisions and
predict outcomes.

How is applied economics used?

 Business Applied economics can help businesses set prices, manage resources, and
expand into new markets.
 Government Applied economics can help governments make policies that affect the
public, such as setting taxes and creating jobs.
 Policy making Applied economics can help inform policy making in the public and
private sectors.

What are some areas of applied economics?

Demographic economics, Labor economics, Business economics, Industrial organization,
Agricultural economics, Development economics, Education economics, Engineering
economics, Financial economics, and Health economics.

Understanding Applied Economics: A Summary

 In the study of economics, there exist two fundamental areas of distinction – core and applied.
 Applied economics is at the center of everything we do, and it helps explain economic theory and apply it to our
everyday lives.
 Applied economics can help us understand more about the prices we pay, how delivery charges work, and
why things may go on sale.
 Business leaders and managers can draw on the lessons from applied economics to make them better
managers.
 Applied economic theories allow us to test and formulate hypotheses.

Economy- is an area of productions, contributions and trades. As well as consumption of goods and services.
Econometrics- It is an application of statistical methods of economic data in order to give empirical content to the
economic relationship. It is typically characterized by the application of the core, reffering to economic theory and
econometrics, as means of dealing with practical issues in field include demographic economics, labor economics,
business economics, agricultural economics, monetary economics, economics history and many more.
John Neville Keynes- Attributed as the first to use the phrase “ Applied Economics”.
Economics- Economics is the study of how people allocate scarce resources for production,
distribution, and consumption, both individually and collectively .

LESSON 3 Basic Economic problems and the Philippine Socioeconomic Development

in the 21st century

The Philippines faces many economic challenges, including high unemployment, inflation,
and inequalityThe Philippines faces many economic challenges, including high
unemployment, inflation, and inequality. These challenges have impacted the country's
socioeconomic development.
Economic problems
Unemployment: High unemployment rates
Inflation: High inflation rates, especially during crisis periods
Income inequality: High levels of income and asset inequality
Infrastructure: Deficiencies in infrastructure
Agriculture: Weaknesses in the agriculture sector
Natural disasters: Vulnerability to natural disasters
Environmental sustainability: Environmental sustainability concerns

Other challenges
Policy rates: Rising policy rates Remittances: Dependency
on remittances
Trade: Import and export bottlenecks
Currency: Declining strength of the Philippine peso
Population growth: High levels of population growth
Economic crisis: Exposure to economic crisis
Conflicts: Exposure to conflicts


 What are the basic Economic Problems?

 Poverty- is a complex issue that occurs when people don't have enough resources
to meet their basic needs. It can affect people's health, education, and ability to
participate in society.
 Inflation-Inflation is the rate of increase in prices over a given period of time.
Inflation is typically a broad measure, such as the overall increase in prices or the
increase in the cost of living in a country.
 Unemployed- is when an individual who is not employed and is seeking
employment, cannot find work. Unemployment is a key indicator of the health of an
economy. A low unemployment rate represents a strong economy while a high
unemployment rate represents a weak economy.
 Inequality- the unequal distribution of income, wealth, and opportunity in a
society. It can be measured between individuals, households, or nations.
 Poor quality of infrastructure- Poor infrastructure refers to the lack of, or inadequate, basic
systems and services that a country or region has. It can include issues with roads,
transportation, water, and more. Poor infrastructure can be a barrier to development and
can negatively impact the quality of life for people in the affected areas.

What are the Basic Economic Problems in the country?

Philippines as a growing country is not exempted from experiencing economic problems.
Under the Duterte administration, the country has significantly improved its economic marks,
however, problems still exist. Take a look at the following scenario and examine or identify
the economic problem
present in it.
Situation #1: You are a fresh graduate at a prestigious university. Yougraduated as summa
cum laude and received numerous recognition awards. You took up an education course in
order to become a teacher, however, after graduating, you could not find available jobs within
the province. What economic problem is present and is affecting you here?
1. In this situation, you are affected by the so-called unemployment problem, which is still
among the basic problems of the country. According to PSA (Philippine Statistics Authority,
the unemployed include all persons who are 15 years and over as of their last birthday and
are reported as: (1) without work and currently available for work and seeking work; or (2)
without work and currently available for work but not seeking work for the following Reasons:
Tired/believed no work is available; awaiting results of previous job application; temporary
illness/disability; bad weather and; waiting for rehire/job recall.

According to the records of PSA (Philippine Statistics Authority), the unemployment rate in the
year 2018 is at 5.3% and this went down a little bit in the year 2019 becoming 5.2%. These
figures show that there is still a huge number of Filipinos who are not working. Not having a
job means not having a source of income to provide for our personal needs and wants, not
being able
to being prone to scarcity issues. Unemployment has been an issue in the
country for many years which is why the government is seeking ways to
address the problem.Aside from unemployment, another basic economic problem is faced by
Filipinos. Discover it by reading and immersing yourself in the situation below.

Situation #2: You are a newly-registered nurse. You wanted to immediately find a job to save
enough money for your sick father’s hospitalization. There is no other available job
opportunity in the area except for an immediate hiring for customer service representatives.
You got the job and you’re now a contact
2. In this situation, you are affected by the so-called underemployment problem, which is also
among the basic problems of the country. Accordingly, labor that falls under the
underemployment classification
includes those workers who are highly skilled but working in low paying jobs, workers who are
highly skilled but working in low skill jobs and part-time workers who would prefer to be full
time.

According to the records of PSA (Philippine Statistics Authority), the underemployment rate in
the year 2018 is at 18.0% and this went down a little bit in the year 2019 becoming 15.6%.
There is a decrease in the percentage rate which means the Philippines is getting better,
however it remains to be an
economic problem. Having a job that doesn’t match your skills still boils down to being prone
to scarcity issues.

Situation #3: Suppose that you, being the eldest of ten siblings were not able to finish your
studies. You were forced to stop going to school at the age of 13 and find a job at an early age
in order to support your siblings. What economic problem can be seen here?
2. In this situation, you are affected by the number one problem of the country which is
poverty.

The booming population growth in the Philippines is another basic economic problem that can
be connected to the issue of scarcity. When population becomes too big, economic resources
may no longer be enough to support the increasing number of people. Food, water, shelter,
medicine and other resources wouldn’t be enough to satisfy every people’s needs and wants.