APPLIED ECONOMICS

Quarter 1 – Week 1
Learning Activity Sheet
Name: __________________________ Grade & Section: _____________
 Activity # 1: Fix Me I am Crumbled: Arranged the following scrambled letters. Answer the guide
questions.
a. I R A S Y T C C - ___________________________
b. E H I C O C - ___________________________
c. A L T I A C P - ___________________________
d. M M I E O S C O R A N C O C- ___________________________
e. M I S C O N C E O - ___________________________
1. How do you find the activity? Is it easy for you to guess the word? Explain your answer.
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
2. What is the most familiar word among the five (5) words that you have arranged? Define the word
and use it in a sentence.
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________

 Activity 2: Explain the differences between Positive Economics and Normative Economics. Give
example.
Differences Example
1. Positive
Economics

2. Normative
Economics

 Activity # 3: CLASSIFICATION: A. Classify the following topics. Write MICRO if it falls under
Microeconomics; MACRO if it falls under Macroeconomics.
___________1. The inflation rate in the Philippines in the last quarter of 2013 was 4.8 %.
___________2. Prices of Toyota vehicles are predicted to go up in December.
___________3. Garlic prices in the past months have riser because producers hoarded their supplies in their
bodegas.
___________4. In the past year, Coca Cola was named the fastest selling product in the market.
___________5. The Philippine economy is greatly affected due to pandemic COVID 19.

B. DIRECTIONS: Classify the following. Determine what economic system is describe in each of
the following sentences.
TE – Traditional Economy CE – Command Economy ME – Market Economy
___________1. Prices are based on the demand and supply.
___________2. The government decides on what goods should be produced.

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___________3. Ancient methods are used in deciding what goods to produce.
___________4. People enjoy freedom of choice in arriving at decisions on what to buy.
___________5. People have no freedom of choice in arriving at decisions on what to buy.
___________6. Economy is stagnant, making use of practices in the olden times.
___________7. Economy is backward because no new technology or production methods are introduced.
___________8. It is the most democratic form of economic system.
___________9. People’s preferences are reflected in the prices there are willing to pay in the market.
___________10. It exists in primitive and backward civilization.
C. DIRECTIONS: Identify which resources is referred to by the following words.
A. Land B. Labor c. Capital
_________1. Entertainers _________6. Technology
_________2. Minerals _________7. Production Equipment
_________3. Forests _________8. Engineers
_________4. Marine Resources _________9. Call Center Agents
_________5. Teachers _________10. Delivery Track

Activity 4: Categorize the characteristics of microeconomics and macroeconomics using the

diagram below.
* Studies the behavior of individual economic units;
* Focuses of the behaviour of individual in the market
* Focuses on parts of the economy: individuals, firms, and industries;
*Studies the economy as a whole
* Focuses on goals like productions standard of living, unemployment, and inflation.
* Policies are focused on monetary policy and fiscal policy.
*Studies of markets of good and services

The Economy

Microeconomics Macroeconomics

1. 1.

2. 2

3. 3.

 Activity # 6: BUSINESS- MINDED

DIRECTIONS: Make a plan for your future business. Use the graphic organizer for the pattern
of your business plan. Write your business plan in a short bond paper.

Name of your business:

Goods and services, you will provide:

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 Location:
Human Resources Needed:
Natural Resources Needed:
Capital Resources Needed:
Target Market:

 Assessment: Choose the letter of the best answer. Write the chosen letter on the space provided.
_____1. A condition where there are insufficient resources to satisfy all the needs and wants of a
population.
a. Absolute Scarcity c. Scarcity
b. Relative Scarcity d. Shortage
_____2. Refers to the value of the best forgone alternative.
a. Opportunity Cost c. Marginal Thinking
b. Trade-Off d. Incentives
_____3. It is one of the factors of production which includes physical and human effort exerted in
production.
a. Land c. Labor
b. Capital d. Entrepreneur
_____4. It is a division of economics that is concerned with the overall performance of the entire economy.
a. Economics c. Macroeconomics
b. Microeconomics d. None of the above
_____5. Which of the following explains economics pertains to the study on how society creates its material
wealth, how it makes this wealth available to its people with minimum difficulties and how it expands its
wealth?
a. Anthropology c. political science
b. psychology d. social science
_____6. Economics is the study of ________.
a. How to make money
b. owe to operate business
c. People making choices because of the problem of scarcity
d. the government
_____7. Scarcity exists _______
a. In all countries of the world
b. Only in poor nations
c. Only in rich nations
d. when people consume beyond their needs
_____8. Which of the following is not a resource?
a. Capital b. labor c. land d. money
_____9. This is an analysis of economics which deals what should be?
a. Microeconomics c. normative economics
b. Macroeconomics d. positive economics
_____10. Which of the following decisions must be made by all economics?
a. How much to produce? When to produce? How much does it cost?
b. What is the price? Who will produce it? Who will consume it?
c. What to produce? How to produce it? Who will consume it?
d. None of the above

Prepared by: Checked by:

CLARISE D. LAUREL MYLA V. COMBALICER, EdD

Subject Teacher Principal II
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Lesson 1.1. Introduction to Economics
Everybody goes through a day faced with constraints or limitations: motorists Pain of high gasoline prices.
Times when people suffer due to shortage of chicken in market, or insufficient allowance for a student who
needs to buy books and school supplies. People always complain about not having enough-not enough
food on the table, not enough money to pay one's debts or not enough income to meet all the family’s
needs. This, in effect, is the existence of what we call scarcity, that is insufficiency of resources to meet the
wants of consumers and insufficiency of resources for producers that hamper enough production of goods
and services.
Scarcity is the reason why people have to practice economics. Economics, as a study, is the social science
that involves the use of scarce resources to satisfy unlimited wants. Part of human behavior is the
tendency of man to want to have as many goods and services as he can. However, his ability to buy goods
and services is limited by his income and purchasing power. It is therefore in this context that man has to
practice economics.
Well-known economist Alfred Marshall described economics as a study of mankind in the ordinary
business of life. It examines part of the individual and social action that is most closely connected with the
attainment and use of material requisites of well-being.
Scarcity is a condition where there are insufficient resources to satisfy all the needs and wants of a
population. Scarcity may be relative or absolute. Relative scarcity is when a good is scarce compared to its
demand. For example, coconuts are abundant in the Philippines since the plant easily grows in our soil
and climate. However, coconuts become scarce when the supply is not sufficient to meet the needs of the
people. Relative scarcity occurs not because the good is scarce per se and is difficult to obtain but because
of the circumstances that surround the availability of the good. Bananas are abundant in the Philippines
and are being grown in a lot of regions around the country. But when a typhoon destroys banana plants
and the farmer has no bananas to harvest, then bananas become relatively scarce.
On the other hand, Absolute scarcity is when supply is limited. Oil is absolutely scarce in the country
since we have no oil wells from which we can source our petroleum needs, so we rely heavily on imports
from oil-producing countries like Iran and other Middle Eastern countries. Cherries are absolutely scarce
in our country since we do not have the right climate to grow them and we have to rely on imports for our
supply of cherries. This explains why cherries are very expensive in the Philippines.
CHOICE AND DECISION-MAKING
Because of the presence of scarcity, there is a need for man to make decisions in. choosing how to
maximize the use of the scarce resources to satisfy as many wants as possible. A homemaker who has a
monthly budget needs to decide on how to utilize it to pay the rent, to buy food, to pay the children's
tuition fees, and to buy new clothes and shoes. If the budget is not enough, then the homemaker has to
give up some of these things. She needs to make a choice. If she decides not to buy new shoes for her
children at. the start of the school year, then this is the choice she gave up.
Opportunity cost refers to the value of the best forgone alternative. When land is devoted exclusively to the
cultivation of rice, we give up an output of bananas or mangoes that we could have planted on that land
area. A producer who decides to transform all is leather into shoes, gives up the chance to produce bags
with that leather. A manager who quits his job in order to take up a master’s degree, gives up his salary as
a manager. That salary is his opportunity cost. Without scarcity, a person does not need to make choices
since he/she can have everything he/she wants. In making a choice, trade-offs are involved.

ECONOMIC RESOURCES:
Economic resources, also known as factors of production, are the resources used to produce goods and
services. These resources are, by nature limited and therefore, command a payment that becomes the
income of the resource owner.

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 1. Land – soil and natural resources that are found in nature and are not manmade. Owners of lands
receive a payment known as rent.
2. Labor – physical and human effort exerted in production. It covers manual workers like
construction workers, machine operators, and production workers, as well as professionals like
nurses, lawyers, and doctors. The term also includes jeepney drivers, farmers, and fishermen. The
income received by labors is referred to as wage.
3. Capital-man-made resources used in the production of goods and services. which include
machineries and equipment. The owner or capital earns an income called interest.

ECONOMICS AS A SOCIAL SCIENCE

Economics is a different science from Biology and Chemistry as these are physical sciences. Economics is
a social science because it studies human behavior just like psychology and sociology. A social science is,
broadly speaking, the society and how people behave and influence the world around them. As a social
science, economics studies how individuals make choices in allocating scarce resources to satisfy their
unlimited wants.
TWO BRANCHES OF ECONOMICS
1. MACROECONOMICS – is a division of economics that is concerned with the overall performance of
the entire economy. It studies the economic system as a whole rather than the individual economic
units that make up the economy. Macroeconomics is about the nature of economic growth, the
expansion of productive capacity and the growth of national income.
2. MICROECONOMICS – it is concerned with the behavior of individual entities such as the
consumer; the producer, and the resource owner. It is more concerned on how goods flow from the
business firm. It is also concerned with the process of setting prices of goods that is also known as
Price Theory. Microeconomics studies the decisions and choices of the individual units and how
this decision affect the prices of goods in the market. It does not focus on aggregate levels of
production, employment and income.

BASIC ECONOMIC PROBLEMS:

1. What to produce and how much – society must decide what goods and services should be
produced in the economy. Having decided on the nature of goods that will be produced, the
quantity of these goods should also be decided on.
2. How to produce – is a question on the production method that will be used to produce the goods
and services. This refers to the resource mix and technology that will be applied in production.
3. For whom to produce – is about the market for the goods. For whom will the goods and services
be produced? The young or old, male or female market, the low – income or the high – income
groups.

How these questions are answered depends on the nature of the economic system in place.
ECONOMIC SYSTEM
Economic system is the means through which society determines the answers to the basic economic
problems mentioned. A country may be under any of the following types or even a combination of the three
economic systems:
1. Traditional Economy – Decisions are based on traditions and practices upheld over the years and
passed on from generation to generation. Methods are stagnant and therefore not progressive.
Traditional societies exist in primitive and backward civilization.
2. Command Economy – This is the authoritative system where decision -making is centralized in
the government or a planning committee. Decisions are imposed on the people who do not have a
say in what goods are to be produced. This economy holds true in dictatorial, socialist and
communist nations.
3. Market Economy – This is the most democratic form of economic system. Based on the workings
of demand and supply, decisions are made on what goods and services to produce. People’s
preferences are reflected in the process they are willing to pay in the market and are therefore the
basis of the producers’ decisions on what goods to produce.

WHY ECONOMICS IS IMPORTANT

1. Economics will help the students understand why there is a need for everybody, including the
government, to budget and properly allocate the use of whatever resources are available.
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 2. It will help one understand how to make more rational decisions in spending money, saving part of
it.
3. Economics will enable the students to take a look on how the economy operates and to decide for
themselves if the government officials and leaders are effective in trying to shape up the economy
and formulate policies for the good of the natin.

SCIENTIFIC APPROACH IN THE EMPIRICAL TESTING OF AN ECONOMIC THEORY

Economics is a study that attempts to explain how an economy operates and how the consumers attempts
to maximize his/her wants within limited means. Using tools such as logic, mathematics and statistics,
the student needs to approach the empirical testing of an economic theory in a scientific manner. This
scientific approach involves the following steps:
1. State the propositions or conditions that are taken as given and do not need further investigation,
as the basic starting point of investigation. These propositions will serve as the premises upon
which the theory is established.
2. Observe facts in connection with the activity that we want to theorize.
3. Apply the rules of logic to the observed facts to determine causal relationships between observed
factors and to eliminate facts that are unnecessary and irrelevant.
4. Establish a set of principles such that formulated hypothesis may be tested as to whether they are
valid or not.
5. Use statistics and econometrics as empirical proof in testing the hypotheses.

POSITIVE ECONOMICS VERSUS NORMATIVE ECONOMICS

1. Positive Economics – deals with what is – things that are actually happening such as the current
inflation rate, the number of employed labor and the level of the Gross National Product. It is an
overview of what is happening in the economy that is possibly far from what is ideal.
2. Normative Economics – refers to what should be- that which embodies the ideal such as the ideal
rate of population growth or the most effective tax system. It focuses on policy formulation that will
help to attain the ideal situation.