GOVERNMENT PROPERTY

NOT FOR SALE

APPLIED
ECONOMICS
Quarter 1 – Module 1:
Economics as Social Science and
Applied Science in Terms of
Nature and Scope

SDO Taguig City and Pateros

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Introductory Message
For the facilitator:

This module was collaboratively designed, developed and evaluated by the

Development and Quality Assurance Teams of SDO TAPAT to assist you in helping
the learners meet the standards set by the K to 12 Curriculum while overcoming
their personal, social, and economic constraints in schooling.

As a facilitator, you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to
manage their own learning. Furthermore, you are expected to encourage and assist
the learners as they do the tasks included in the module.

For the learner:

This module was designed to provide you with fun and meaningful opportunities
for guided and independent learning at your own pace and time. You will be
enabled to process the contents of the learning resource while being an active
learner.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of
the module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your
answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning
and gain deep understanding of the relevant competencies. You can do it!

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 Let’s Learn

This module was designed and written with you in mind. It is here to help you
understand and differentiate economics as social science and applied science in
terms of nature and scope. The scope of this module permits it to be used in many
different learning situations. The language used recognizes the diverse vocabulary
level of students. The lessons are arranged to follow the standard sequence of the
course. But the order in which you read them can be changed to correspond with
the textbook you are now using.

After going through this module, you are expected to:

1. define basic terms in economics
2. explain the principles of economics as a social science
3. explain economic theories in applied economics
4. differentiate economics as social science and applied science in terms of
nature and scope

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 Let’s Try

Choose the letter of the best answer. Write the chosen letter on a separate sheet of
paper.

1. It is a study of how individuals and societies choose to use the scarce

resources that nature and previous generations have provided.
a. positive economics
b. economic theory
c. economics
d. economist

2. Economics is all about ____________.

a. making money
b. making decisions
c. government controlling resources
d. none of the above

3. The knowledge gained from studying economics will enable you to _______
a. achieve all of your goals in life
b. become rich
c. make wiser economic decisions throughout your life
d. none of the above

4. It is a process of combining inputs in order to make something for

consumption.
a. Production
b. Combination
c. Manufacturing
d. All of these are correct

5. Under what scope of economics is this: The government is predicting the

future levels of inflation and employment rate.
a. Microeconomics
b. Macroeconomics
c. Positive economics
d. None of these are correct

6. It looks as the individual unit such as the household, the firm, and the
industry.
a. microeconomics
b. econometrics
c. macroeconomics
d. descriptive economics

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7. The following are the factors of production except.
a. capital
b. land
c. labor
d. services

8. It arises mainly because resources are scarce or limited.

a. marginal cost
b. opportunity cost
c. efficient market
d. none of these are correct

9. The things that people need and want are classified into
a. goods and services
b. wealth and services
c. services and choices
d. all of the above

10. What is a need?

a. anything that it is used to make a good or service
b. things that are made
c. things we need to survive
d. none of the above

11. What are the resources called that are needed to produce a good or service?
a. Goods and services
b. Needs and wants
c. Factors of productions
d. All of the above

12. What are natural resources?

a. Animals
b. Things from nature, not man-made
c. Trees
d. All of the above

13. What is labor?

a. Hard work
b. People that do the work to produce something
c. People that only do the physical work
d. None of the above

14. What could be an example of capital?

a. Buildings
b. Machines
c. Money
d. All of the above

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Lesson Economics as Social Science
1 and Applied Science in
Terms of Nature and Scope
We all want to make wise choices in life and as you grow older, the more important
choices you will have to make. Many of these choices will deal with economics.
Economics is all about making choices. Economics is the study of how people,
which includes countries and companies, make choices on buying, selling, using,
and distributing things.

This lesson helps you understand and differentiates economics as social science
and applied science in terms of nature and scope.

Let’s Recall

Activity 1:
A. List four examples of NEEDS and WANTS below
Needs Wants
1. ___________________________________ 1. ___________________________________
2. ___________________________________ 2. ___________________________________
3. ___________________________________ 3. ___________________________________
4. ___________________________________ 4. ___________________________________

B. List four examples of GOODS and SERVICES below

Needs Wants
1. ___________________________________ 1. ___________________________________
2. ___________________________________ 2. ___________________________________
3. ___________________________________ 3. ___________________________________
4. ___________________________________ 4. ___________________________________

Notes to the Teacher

Guide question: Why should different economies decide
on what goods to produce, learn the technique to
produce them, and know from whom they should

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 Let’s Explore

As a senior high school student, the subject may not appeal to you and see
economics as another subject that you must take and pass to meet certain
educational requirement. But you will realize the importance of economics when
you start buying things and realize that the allowance you get from your parents is
not enough to buy the things that you want.
Everybody goes through a day faced with constraints or limitations. 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. And scarcity is the
reason why people have to practice economics.

Let’s Elaborate

ECONOMICS AS A SOCIAL SCIENCE

Social science is defined as the study or discipline that aims to explain
human behavior and society. It is a study of society or parts of it that utilizes the
scientific method of observation, hypothesis formulation, testing and
experimentation.
Economics is a social science because it tries to understand how members of
a society behave and organize themselves to meet their individual and communal
material needs and desires. It explains how the unlimited demands and desire of
man or consumer is given satisfaction by the goods and services produced using
the limited economics resources available in the country.

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ECONOMICS AS AN APPLIED SCIENCE
Applied science is the discipline that utilizes scientific knowledge to develop
practical solutions to society’s problems.
Economics uses theories to help come up with answers when analyzing a
certain situation. When you put these theories into action by trying things out, you
are actually applying these ideas and bringing them into practice. Simply put,
when economic principles and theories are applied to real-life situations, and
outcomes are predicted because of this, then economics has been applied.
Applied economics is thus the study or economics relative to real-life
situations. This is done by observing how theories work in practice. Applied
economics usually deals with numbers on which possible outcomes being reviewed
are based and supported.

COMMON TERMS IN THE DEFINITION OF ECONOMICS

 Scarcity: is a situation wherein the amount of something available is

insufficient to satisfy the desire for it.
 Resources: labor, capital, land, and entrepreneurship that are used to
produce goods and services also known as factors of production.
 Production: the process of combining inputs to make something for
consumption. It is the act of creating output.
 Output: a good or services which has value and contributes to the utility of
individuals.
 Distribution: the allocation of the total product among members of society.
 Consumption: the use of a good or service

WHY STUDY ECONOMICS?

I. To learn a way of thinking: It helps you understand how people make
decisions
− Economics has three fundamental concepts:
 Opportunity cost: the best alternative that people forego, or
give up, when making a choice or decision
 Marginalism: the process of analyzing the additional costs or
benefit arising from a choice or decision
 Efficient Markets: a market in which profit opportunities are
eliminated almost instantaneously

II. To understand society: It helps you understand how people interact

with each other.
 Trade can make everyone better off.
 Markets are usually a good way to organize economic activity.

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  Governments can sometimes improve economic outcomes.

III. To understand global affairs and be an informed citizen: It helps you

understand the forces and trends that affect how the economy as a
whole.
− The standard of living depends on a country’s production.
− Prices rise when the government prints too much money.
− Society faces a short-run tradeoff between inflation and
unemployment

SCOPE OF ECONOMICS
There are two scope of economics
1. Macroeconomics
− It looks at the economy as a whole and examines the factors that
determine national output or product.
− It looks at the big picture such as growth, employment, etc., and
choices are made by large groups (like countries)
2. Microeconomics
− It deals with the functioning of individual industries and the behavior
of individual economic decision-making units such as firms and
household.
− It looks on how do individuals make economic decisions

METHODS OF ECONOMICS

There are two methods of economics

1. Positive Economics: focuses on causes and effects, behavior relationships,

and facts involved in the evolution and development of economic theories.
Often called “what is” economics.
 Descriptive economics: the compilation of data that describe
phenomena and facts
 Economic theory: set of related statements about cause and effect.

2. Normative Economics: expresses value or judgements about economic

fairness or what the outcome of the economy ought to be. Often called “what
should be” economics.

WHY ECONOMISTS DISAGREE?

In some cases, the disagreement may be positive in nature because our

knowledge of the economy is imperfect, and certain facts are in dispute.

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 In most cases, the disagreement is normative in nature because while the
facts may not be in dispute, differing values of economists lead them to dissimilar
conclusions about what should be done.

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 Let’s Dig In

Activity 1.
Use the terms below. Label each factor of production below.

Capital Natural Resources

Entrepreneur Labor

1 2
. .

3 4
. .

Activity 2.
A. Using the following terms, complete the chart below.
Labor Produces Capital
Needs Services Wants
Goods Natural Resources Four Factors of Production
Entrepreneurship
5
.

3
.
8
6 7
.
. .

9
.

B. Briefly discuss your answer in the illustration above. Limit your answer to three
to five sentences.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

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 Let’s Remember

Direction: Fill in the blanks with the correct answers.

1. It is the branch of economics that studies the behavior of

the economy as a whole.
3. It is the study or discipline that aims to explain human
behavior
5. It is the study of economics relative to real-life situations
6. It refers to economics “as it should be”
7. It is the science that manages limited resources in demand
8. These are the things people may desire to have but are not
necessary for survival
10. Is anything that it used to make a good or services
11. Refers to work performed for another person
12. Refers to the compilation of data that describe
phenomena and facts
14. Refers to the foregone value of the next best alternative

Let’s Apply

Activity 1.
Cut out and paste news item that is related to any economic issue/
situation. Read and analyze the economic news. List down all the positive
statements and the normative statements
In your own idea/belief, were the normative statements correct or not?
Explain your answer in three to five sentences.
Positive Economics: ___________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
Normative Economics: _________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
Analysis and Suggestions based on your own ideas or belief: ___________________
__________________________________________________________________________________
__________________________________________________________________________________

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 Let’s Evaluate

1. Why study economics?

a. Because it is an essential part of the study of society
b. Because it is a required course in schools
c. Because other countries are studying it
d. None of these are correct

2. Refers to the creation of the utility.

a. Entrepreneurship
b. Economic system
c. Production
d. Labor

3. Decision on resource allocation shall be made together by _____________

a. Corporation
b. Businesses
c. Individuals and society
d. All of these are correct

4. It is the problem on how to make use of the limited and scarce resources
available
a. Economics
b. Economic problem
c. Scarcity
d. Trade-off

5. For every additional production of a box of milk, there is an equivalent

incremental cost. This is an example of a/an__
a. Opportunity cost
b. Marginalism
c. Normative economics
d. Efficient market

Let’s Extend

Activity 1. Research Analysis

Based on your personal observation, briefly discuss the current status of the
Philippine economy. Write your answer on a separate sheet of paper

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 Answer Key

What I Have Learned What I Know

1.Macroeconomics 1.C
2.Social Science 2.B
3.Applied Science 3.C
4.Normative Economics 4.A
5.Economics 5.B
6.Want/s 6.A
7.Resources 7.D
8.Services 8.B
9.Descriptive Economics 9.A
10.Opportunity Cost 10.C
11.C
Assessment 12.D
1.A 13.B
2.C 14.D
3.D
4.B What's More
5.B 1.Natural Resources
2.Labor
3.Capital
4.Entrepreneur
5.Four Factors of Production
6.Labor, Capital, Natural
Resources, Entrepreneur
7.Produces
8.Goods & Services
9.Needs & Wants

References
Laraya, J. De Leon J., & Santos, R. (2019), Applied Economics (pp. 1-19).
Mandaluyong: Books Atbp. Publishing Corp.
Tullao Jr, T. (2015). Understanding Economics in the Philippine Setting. (pp.
1-5). Quezon City: Pheonix Publishing House, Inc.
Viray Jr, E. & Avila-Bato, J., (2018). Applied Economics (pp. 1-5).
Mandaluyong: Anvil Publishing Inc.

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 Development Team of the Module
Writers: Suzanne M. Paderna
Editors:
Content Evaluator:
Language Evaluator:
Reviewers: Name (
Illustrator: Name
Layout Artist: Name
Management Team: DR. MARGARITO B. MATERUM, SDS
DR. GEORGE P. TIZON, SGOD Chief
Name of EPS in-charge of Learning Area
DR DAISY L. MATAAC, EPS – LRMS/ALS

For inquiries, please write or call:

Schools Division of Taguig city and Pateros Upper Bicutan Taguig City

Telefax: 8384251

Email Address: sdo.tapat@deped.gov.ph

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