so good morning to everyone our topic for today is all about is the introduction to applied economics so allow me to share my screen okay so introduction to economics we'll begin first by defining what is economics from the word economics it comes from oikonomia or oikonomus yet this is a greek word meaning household management or management of the household so that's really the basic meaning of economics household management so if you are go if the way you manage the household from the household source from the budgeting you're actually down to the budgeting you're actually undergoing or implementing the term economics so this definition of economics are as follows it is the study of what constitutes rational human behavior in the endeavor to fulfill the needs and wants or the study that attempts to explain how men how an economy operates and how the consumer attempts to maximize his or her wants within the limited needs so that's a study that constitutes rational behavior okay so to fulfill the needs and wants this explains or this uh attempts to explain how an economy operates okay um what are their behaviors sudden changes in the prices or how the consumer attempts to maximize his or her wants and limited needs and now within the limited needs it is also the study of how people use their scars resources yes our resources are not unlimited shortage it's because we are so many in the philippines or even not in the philippines but our resources are constant okay so limited longshot so this is a study economics is the study how to use okay this course resources to satisfy their unlimited ones we as humans we have unlimited ones right okay so and nothing for us to certify and for us to be satisfied and to be delighted by these resources however these are scarce okay now it uh it should be sustained okay okay another um definition is it is the efficient allocation of scars means of production toward the satisfaction of human needs and ones and the science that deals with the management of scarce resources so next thing since our resources are scarce as humans okay need to have the sustainable living okay so we have to make decisions as to how to manage these cars resources to satisfy our unlimited ones and needs okay so those are the different definitions of economics now we have two branches of economics first one is macro economics and the other one is microeconomics so when we say macro it is bigger or larger in scope while micro is not not like the macro so it is more on specific okay so my macro economics is the study of the economic behavior of the economy as a whole especially the national economy so it focuses on the aggregate flow of goods and resources and examines the causes of change in the overall flow of money so the overall movements of goods and services and general use of resources it is known as the analysis of employment and income yes macroeconomics behavior of the economy as a whole okay aside from that the national economy so larger telegram cumulative flow of goods and services okay and flow of the money what is the flow or spending of money okay the overall movement of goods and services imports exports and the general use of resources employment in general unemployed okay so it also focuses more on the gnp or the gross national product and gross domestic product of the country okay the measurement of how how how many goods and services are being produced uh in a year and so it is also known as the analysis of employment and income okay that's macroeconomics okay state from that we have microeconomics this is the study of economic behavior in particular markets such as the market for computers or unskilled labor so it focuses on the economic behavior of people and businesses who decide on what to buy and sell specific as compared to the macro okay behavior non-particular markets okay yeah it also focuses on the behavior of people and businesses so it's the basic unit right behavior and household the people and the businesses who decide on what to buy and sell aside from that how much to work and play and how much to borrow and save so it before it really focuses more specifically on the behavior and the decision of a certain individual or household it also studies the factors influencing individual economic choices and how these markets are coordinating various decision makers and choice so it focuses on the individual entries the consumer the producer and the resource owner behavior it is also more focused on how products move from the businesses to customer and how resources flow from the resource owner to the business it is also known as the price theory concerned with processes of setting prices of goods okay so again microeconomics is more on the study of a particular household or behavior of the people and businesses okay what are they what do they want to decide in uh producing goods in this services with regards to the business and people how much individual those are the two branches of economics next is the basic decision problems so basic decision problems so first one is consumption it is a problem that people have to deal with their day-to-day activities okay having their individual wants people decide the types of products and services they want to use or consume and the corresponding amount that they should use and buy so in here their choices for instance are food clothing technological gadgets and weather supplied from the government such as health and education are privately produced goods so that's consumption basic consumption our basic problem consumption what they are going to consume okay and the corresponding amount that they should use and buy so more on personal and effects and that's consumption uh anything that they have to deal with their day-to-day activities okay next is production so in production it is more on the problems of the manufacturers and businessmans producers are normally concerned about the production of goods and services they determine the consumer's needs wants and demands and also they decide on how to distribute the resources to meet customer demands we all know that we have the we have unlimited wants and needs right so businessman they have to decide and plan resources satisfying human wants and needs okay so they also studies they will not uh produce more more of those units so that is a basic problem and that is production the next is distribution how to distribute these goods produce to the consumers so it is mostly addressed by the government so there must be an appropriate allocation of all resources benefiting all members of the society we all know that every provincial or municipalities may on the montana so if they want to distribute here to the different uh different cities so they have two distribute it uh or allocate it fair okay depending on the needs i am so manga members society so that's distribution paradigm services will be okay will be distributed appropriately or allocated appropriately the society and the last basic problem is the growth over excuse me so as the societies grow and number they continue to live on the problems of choice consumption production and distribution must be perceived in the context of how they will be affecting events in the future so that's growth over time society growing increasing population and we also continue to live on and that we also consume resources so growth over time means that anuyama gigan decision nathan will also affect in the future so a wise man a man or an individual businessman and the society assault must be wise in sustaining this scarce resources okay so those are the basic problems and now we have here the economic production resources so economic production resources are the resources or inputs when they say inputs to produce the goods and services that the people wanted okay so first is the land this is categorized as fixed resources infinite exhaustible and depletable it is all that nature must freely provides rents serve as payment to land owners so if you have this land predi moto actually okay as part of your business activity yen so [Music] okay it happens it really happens so capac the land owners will receive srn okay next is the labor labor is the exerted effort of individuals when producing the goods and services so it covers a wide variety of abilities characters characteristics and skills so for short this labor is really needed parama supply not in most of the works are labor intensive meaning excerpt certain effort through human intervention operating machine right because of technological advancement will do the process so the man now is made so more on administer monitoring alarm if the machine is working or functioning as expected so none okay so salary or wage is given to individual in exchange for the rented labor according to lyanna jr 2016 labor is also known as human resources it reflects human capital available to turn raw material or national resources into consumer products human capital comprise all able-bodied people capable of working the economy of the nation and offering other individuals or businesses with different services so that is labor okay so [Music] the baba was a new labor labor capacity because of the machines next is the capital you cannot do or do business or provide the resources if you don't have this one so these are man-made goods used when producing other goods and services it is a form of an asset that is mainly as a means of exchange interest is the income that the owner of the capital is earning so capital signifies the monetary resources because okay our businesses used to buy these natural resources land in other capital goods so capital okay or also known as monetary resources move the economy of a nation as people purchase and sell resources to people and businesses so capital also signifies the most important physical assets used in the production of products and services by individuals and businesses so the capital stock of the nation depends on its savings level savings is part of the person or economy's income which is not spent on consumption okay so monetary resources and the savings okay so you know no man what is the concept of the savings debt if your uh income is in excess with your expenditure then you can see that surplus actually and that is savings okay so capital every individual cannot do cannot provide their wants and needs or uh cannot able to produce goods and services if they don't have this one okay the monetary resources the nexus entrepreneurship it is an economic activity that might earn the entrepreneur a profit or loss an entrepreneur is an individual organizing managing and assuming the business risk and developing a new product or idea turning into successful business having skills in management necessary to develop run and expand the business so entrepreneurship it's more of a long businesses than goods and services nothing so actually there are individuals or business owners that assume really business risk risk business what if in business in establishment or in demand in the economy or in the society so but if ever that risk really uh really bears fruit then magandanaman okay the higher the risk the higher also the return so that is why um entrepreneurship are also important because they create employment business establishments the president in the uh in the country really allows foreign investors to put business here in the philippines because say if there are foreign investors that are doing business here in the philippines it also creates employment so [Music] okay so next is the foreign exchange it is the dollar in the dollar reserves of the economy has and so that's foreign exchange next the opportunity cost so scarcity and include the nation scarcity it is a condition facing all societies because there are not enough productive resources to satisfy people's unlimited wants so it is a condition where there are insufficient resources to satisfy all the needs and wants of a population as such it becomes a resource allocation dilemma because of scarcity okay but sustained every year we are we become larger and larger in population pandemic right because okay satisfying needs and once nan consumers so that's the concept of scarcity since car city is evident clarence people need to decide on the means of maximizing the use of limited resources challenging how do we maximize these limited resources and what is our purpose to satisfy the unlimited ones so we have here opportunity cost snap on set it is the value of the best forgot alternative or the value of what is given up when one makes a choice opportunity cost is perceived in the relative price on one's items should be relative to another's item's price for example parameters opportunity cost the price of one 250 ml alcohol is priced at 50 pesos and the other one is 555 grams instant noodles are priced at 10 therefore the relative price of one 250 ml alcohol bottle is equal to five okay 55 grams of instant noodle for pouches so that's the relative okay but another example is a definition the value of the best for gun alternative or what value what is given up when one makes a choice and the young pin or go nothing that's opportunity you want to buy a cell phone through earning okay or earnings allowances more and you want to go to uh travel hiking in demandian [Music] where you want to buy a cell phone through your allowances now if you want to hike if you if you want to buy a cell phone indeed um so if you chose to buy a new cell phone then the value for a gun is the value or the amount that could be expand or that could be spent rather in hiking so that's the opportunity because that's the opportunity because because we uh chose another alternative okay next there's no such thing as free lunch this is in connection with the opportunity cost this explains the notion of opportunity cost why because decision making involves trade-offs not the trade of style we have to choose one we have to uh decide where where whether to choose this alternative or not okay and this suggests that in society there are no real free offers there must be someone who pays for it for instance the person giving the gift pays for goods and services given as a gift free to individuals so ben again shannon give actually you'll give the bini kisa it's not actually for free there is someone who actually pays for it so that's the concept of no free lunch okay there's no such thing as free lunch even if there is no one to shoulder the direct cause society in the case of negative environmental impacts such as evolutions assume the responsibility so that's the concept of no such thing as pregnant we have positive and normative economics so positive economics is an economic analyst that considers economic conditions as they are consider or consider economics as it is so the objective of scientific explanation are used in the analysis of different transactions in economy so example of positive statements positive economics if to have as they are and as it is the country's unemployment rate stayed 5.3 percent in january and underemployment hit the lowest level level at 14.18 in decades so that's positive statements unemployment next day hindi nag increase therefore my naga economy or my behaviors economy na nagpa i know [Music] marami didn't suffer within uh below the poverty level and neglecting underemployment so meaning the economy is not experiencing slowdown because of too much politicking and corruption in the government so again this anal this is an analysis okay that pertains to economic condition as they are okay what really actually is happening in the economy so that's positive economics next is the normative economics it's an economic analysis that judges economic conditions as this should be upon perfectionist this must be it is also focuses on policy making that will allow ideal situation to be achieved example the philippine government should initiate political reforms to regain investor confidence and consequently boost the economy and to minimize the effect of globalization the philippine government should release a stimulus package geared toward encouraging economic productivity so this should be this example okay that they must have political reforms okay totally gain investor confidence okay actually [Music] they are the one who create employment okay and then the measurement of goods being produced within a year yeah so economy yeah okay so in the normative uh you have to provide uh this more or this focus is more on an economy as should be okay so near context yeah policy making it is the greek term meaning all other things held constant or else equal it is an assumption used in analyzing the relationship between two variables as other factors are unchanged okay so all factors affect economic situations are not considered economic analysis in simplifying the context of economic phenomena economists devised a wave acid response assumptions okay etho is applicable to some concept and demand and supply netting let's see on grafton supply and demand is only focusing more on the quantity and the price okay i know you're familiar with the graph supply and demand variable that's the the quantity in the price actually it is not the price that really i know uh uh that really affects the behavior of the demand in this supply marami fashion factors when all other things are held constant sosa graph and supply net is a graph and demand and supply price language considered not other not the other factors okay next economics as an applied science so when you say applied science is that the discipline dealing with the application of scientific knowledge it's application not to problems to develop practical solution okay my scientific knowledge style your theories or principles this must be applied in actual situations practical solutions okay applied economics is the study of economics relative to real life situations by observing how theories work in practice okay it typically deals with the numbers on which are focused and backed up by potential results being reviewed next is applied economics the application of economic theory okay and econometrics in specific settings to analyze potential outcomes so we have economic theories this is a simplification of economic reality to make predictions about the real world and dominating economic theories so when we go beyond the topic okay these economic theories will be applied okay for us to provide practical solutions by the use of econometrics okay multiply and demand nothing elasticities these are the application of econometrics okay statistical and mathematical theories to economics for testing hypotheses and future forecasting cracks okay applied economics application it is a powerful tool that allows the real and full picture to unfold so that from the current position it becomes possible to determine what to do and where to go we have applied economics my real picture tile of what is really happening what is the problem in this current situation will be the basis on what to determine a positive a possible solution okay again it also serves as a mechanism to decide what steps to enhance the current situation that could logically be pursued okay if there's a problem any more possible alternatives nothing going to provide okay the services or to solve the problem it also teach useful lessons about how to prevent a negative situation in the end before or in the past alternatives for marami ayan practically hindi nasa shaman in the future okay to mitigate the impact okay so we have economic systems economic system is a set of mechanisms and institutions that resolves what how and or whom questions it is how society responds to the basic economic questions i and so we have these different economic systems we have pure market economy our market economy and this economic system in is in which private firms account for all the production so it describes an economic system where markets play a relatively large rule so that's a market economy okay it is also known as a free market economy and that is most democratic form of economic system so we have here they buy it is also applicable here in the philippines by market economy the sellers or the businessman's are free to put up businesses right in the market to provide goods and services to the consumers and next is pure command economy it is an economic system which all resources are governed owned and controlled uh and all production is directed by the central plans of the government so we have command and plant economy and command economy actually same lender okay and uncommon economy authoritative system where decision making is centralized in the government or planning a committee so government so you miss the market okay market goods decision and economy as a whole uh command economy the market has no choice but to obey the policies yeah plant economy mostly government controlled india the government deciding what to produce at what quantity and at what price and we have also we have also some four parts we need to do this we are prohibited to do this one and do this what i do that one so therefore hindi thai market um purely market economy fully a mix of market and command so philippines is on the third one mix economy it is an economic system that mixes central planning with competitive markets it is a mix of rather a free economy such as market okay combined with plant economy as well as avoiding the issues with capitalism and socialist economies and we have transitional economy economic system in the process of shifting okay from central planning to competitive once you shift from one part one type of economy to another type transitional okay from central planning to competitive markets from planning a plant economy to a market economy and we have the last one traditional it's an economic system shaped largely by custom or religion and human economies that before that the people are simple for us for them to survive they move from one place to another they hunt for food so that's uh and they want if they want to buy something they exchange okay they exchange goods like barter barter system and this practices that have been preserved and transferred from generation to generation over the years economic questions okay so we have five economic questions exist it's because of our resources in which they are scarce so we have the development economic question first economic question is what to produce and how much anu produced okay so these factors consider when producing products services that the people need available bank resources if ever my lugar battalio for the location okay for the business and people customs traditions consider yen a society decides the quantity in the quality of products and services that should be produced in the economy next one is how to produce since and by how much produce before the quantity quality of the production must come first but focus focuses more on the process of producing those identified products to be produced okay this corresponds to the combination of resources and technology and panga garment and to convert inputs into outputs machines yeah that is used in the production next economic question is for whom to produce produce resources this question identifies the individual or sectors which demand to produce goods simply by planning the money manufacturers they are producing this one because a certain part of our a certain type of our uh type or part of our place or as a whole needs it okay and also to determine their consumption behaviors and patterns economy should identify the target market of the goose and services proper research and demographics okay are these resources of the economy being utilized or some of them lying idle and unemployed so the production system is considered inefficient if resources are not completely utilized for example the labor force nothing a liberal force is composed of employed unemployed and underemployed so it can be measured on if you live or not and is completely utilized by ayan or hindi in goods and services but nothing are the resources are being utilized yeah so that's the next economic question next is the capacity is the capacity of the economy to produce growing goods growing or just remaining the same over time so this is somewhat a measurement from previous to korean okay gross domestic and gross national product for us to know if how much goods and services are being produced in a year sikho comparian for us to answer the economic question number five growing by the economy not in our hindi somalila for example gdp they manage fly craft so on and so forth that's the end of the slide so i hope you learned a lot with the topic so see you next meeting for our next video tutorial