Lesson 1.

Economics as a Social Science

Applied Economics
General Academic Strand | Accountancy, Business, and Management
In 2013, the Enhanced
Basic Education Act was
introduced which
brought about the K-12
program.

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This program had
students making their
first major life decision
on which track and
strand to pursue.

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It might surprise you to
hear that students made
use of economics in
making their decisions.

How was economics

present in this situation?

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 This lesson serves as a prerequisite lesson for the
Learning following DepEd competency:
Competency
Define basic terms in applied economics
(ABM_AE12-la-d-2).

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Learning
Objectives ● Understand the relationship between
scarcity, choice, and opportunity cost.

● Distinguish between microeconomics and

macroeconomics.

● Analyze real-world situations using different

basic economic concepts.

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 Deserted Island Wishlist
Let’s
Connect Imagine that you find yourselves on a deserted
island with no food, water, or any other readily
available resources.

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 Deserted Island Wishlist
Let’s
Connect
After your first few days of surviving on the
island, you come across a shipwrecked container
that contains ten supplies.

The class will be divided into groups of three to

four students each.

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 Deserted Island Wishlist
Let’s
Connect
1. Each group is to prepare a list of ten items they
want to find inside the container.

After a few hours with your new supplies, a

rogue wave comes in and destroys your
respective camps.

2. Each group will only be able to save half (or five)

of their supplies. Discuss amongst yourselves
and decide which five items you will keep.
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 How did you choose the initial list of ten items
Let’s you wanted with you on the island?
Connect

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 If you had been allowed a list of 15 items, what
Let’s would you have added? What if the list could
Connect accommodate 20 items?

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 When the rogue wave hit, how did you choose
Let’s
which five items to save?
Connect

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Essential
Question

How did you use economics to decide on

your strand in senior high school?

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 Economics as a Social Science
Economics

● Seeks to understand how

choices are made
● Is considered a social science
as it seeks to study humans
with empirical tools

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 Basic Economic Concepts
The Economic Problem

● Human wants are unlimited; however, resources are

scarce.
● The reason why individuals are forced to make
choices

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 Basic Economic Concepts
Scarcity

● The limited availability of a

resource, good, or service
● A resource is scarce when
quantity is limited relative to
the demand for it.

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 Basic Economic Concepts
Example of Scarcity

In March, the WHO had already

shipped out over 500 million sets
of PPE. However, the WHO also
reported that 89 million surgical
masks are needed every month.

Face masks are a scarce resource.

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Check Your
Progress
Aside from PPEs, what are some other
things that have become scarce because of
the pandemic? Provide two to three
examples.

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 Basic Economic Concepts
Choice

● Because there is scarcity,

people have to choose
which wants to satisfy
first.
● People decide how to
allocate their limited
resources.
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 Basic Economic Concepts
Utility

● The satisfaction or usefulness the consumption of a

good can bring
● One of the considerations when making decisions

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 Basic Economic Concepts
Example of Utility

If you enjoy instant noodles, then

economics would say you gain
utility from consuming or eating
that good.

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 Basic Economic Concepts
Utility

Economists believe that

humans are rational beings, and
as such will make decisions that
maximize their utility.

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 Basic Economic Concepts
Opportunity Cost

● The value of the next best alternative

● What we give up by choosing something else
● Includes the monetary costs, time, and effort

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 Basic Economic Concepts
Example of Opportunity Cost

Choosing to pursue the ABM strand

under the academic track means
missing out on the opportunity to
take STEM or HumSS.

The strands and tracks you did not

pick are your opportunity costs.
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 Basic Economic Concepts

Production Possibility Frontier

● Diagram that models scarcity,

choice, and opportunity cost.
● Shows the choice between two
options (PPE and food)
● Blue curve represents their
limited resources.

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 Basic Economic Concepts
Production Possibility Frontier

● Points on or inside the PPF

curve represent the possible
choices for production.

Example:

Points A, B, C, and D are all on or

inside the curve.
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 Basic Economic Concepts
Production Possibility Frontier

● Points on the PPF curve are

efficient. They maximize all
available resources.

Example:

Points A, B, and C are all on the

curve.
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 Basic Economic Concepts
Production Possibility Frontier

● Points inside the PPF curve are

possible but inefficient as it
leaves resources unused.

Example:

Point D is inside the curve.

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 Basic Economic Concepts
Production Possibility Frontier

● Points outside the PPF curve

are impossible given the
current limited resources.

Example:

Point E is outside the curve.

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Check Your
Progress

How does the production possibilities

frontier illustrate the concepts of scarcity,
choice, and opportunity cost?

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 Basic Economic Concepts
Production Possibility Frontier

Scarcity is seen with how the

curve prevents us from fulfilling
all the wants for both PPE and
food.

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 Basic Economic Concepts
Production Possibility Frontier

Choice is visualized through the

different points of production (A,
B, C, and D) that are available.

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 Basic Economic Concepts
Production Possibility Frontier

Opportunity cost is present

because choosing any of the
points means missing out on the
other alternatives.

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 Basic Economic Concepts
Microeconomics Macroeconomics

● Subset of economics that ● Subset of economics that

focuses on the decisions focuses on aggregates
of smaller agents. and groups of agents.
Example: Example:
A SHS student choosing Understanding how the
what strand to take student population of Luzon
chose their tracks for SHS
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 Give a thumbs up if the statement is true or a
Try This!
thumbs down if the statement is false.

👍
TRUE
👎
FALSE
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 Give a thumbs up if the statement is true or a
thumbs down if the statement is false.
Try This!

1. The scarcity of a resource refers to whether

or not it is large in quantity.
2. Opportunity cost only exists when we spend
money on something.
3. Humans have to make choices because of the
reality of scarce resources.

36
 Give a thumbs up if the statement is true or a
thumbs down if the statement is false.
Try This!

4. Economics is the study of how people make

choices.
5. Economists evaluate decisions by weighing
their monetary costs.
6. In the PPF, as more one good is produced, the
less the other good can be produced.
7. Opportunity costs are only quantitative by
nature.
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 Give a thumbs up if the statement is true or a
thumbs down if the statement is false.
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8. Studying the choices made by a group of

students falls under the scope of
macroeconomics.
9. Opportunity cost is the value of the worst
alternative.
10.Being efficient means maximizing all available
resources.

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 The Amazon rainforest is one of the most
biodiverse ecosystems in the entire world and
Challenge
Yourself serves as protection against climate change.

About 60% of the rainforest resides within

Brazil, and the government, led by president Jair
Bolsonaro, have recently pushed towards
industrializing it. In the last 50 years, over 17%
of the forest’s original area has been turned into
roads, dams, and other business ventures.
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Challenge
Yourself
Using the concepts of scarcity, choice, and
opportunity cost, evaluate the Brazilian
government's stance on the Amazon rainforest
issue.

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Challenge
Yourself

Is the Amazon rainforest issue a

macroeconomic or microeconomic issue?
Explain your answer.

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Wrap-
● Economics is a study of choices and
Up understanding how scarce resources can be
allocated to fulfill unlimited human wants and
needs.
● Scarcity, or the reality that resources are
limited, forces humans to choose where to
allocate them.
● In making choices, we inevitably have to give up
the alternatives. This represents opportunity
cost or the value of the next best option.
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Wrap- ● The production
Up possibilities
frontier is a
fundamental model
that economists use
to illustrate the
concepts of scarcity,
choice, and
opportunity costs.

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Wrap-
Up

● The fields of economics differ on the scope of

their study. Microeconomics focuses on
individuals and smaller economic agents, while
macroeconomics looks at aggregates and
larger economic agents.

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Wrap-
Up

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