APPLIED ECONOMICS marketing initiatives success.

Applied
economics offers the analytical tools to
Economics-A Social Science concerned with the
incorporate each element into an integrated
PRODUCTION, DISTRIBUTION, and CONSUMPTION
whole.
of Goods and Services.
MAIN BRANCHES OF ECONOMICS  Healthcare Economics: Even before COVID-
19 gripped the world, healthcare was an
MICROECONOMICS industry in rapid transition and under
[Link] on supply, demand, and other forces severe stress. Predictive analysis, resource
allocation,and determining policy initiatives
[Link] the study of individuals and business decisions that support public health are critical roles
that determine price levels, making it a bottom- for applied economics in healthcare.
up approach
BASIC ECONOMIC CONCEPTS
MACROECONOMICS Needs are things we really require to
[Link] of inflation, price levels, economic growth, survive, such as basic food, clean water,
national income, gross domestic product (GDP), shelter and
and unemployment numbers. basic clothing.
Wants are things we feel might improve our
[Link] a top-down approach and looks at the lives, but we do not really need these things
economy as a whole to determine its course and to survive.
nature. SCARCITY “is a naturally occurring limitation
on the resource that cannot be replenished”
ECONOMIC AS AN APPLIED SCIENCE
-It involves the application of economic theories OPPORTUNITY COST AND COMPARATIVE
and principles to real-world issues and problems. ADVANTAGE
- “It is essential in the study of economics
 Environmental Economics: What is the cost
because individuals, firms and the
of command-and-control environmental
government are always faced with choices
regulation vs. market-based incentives?
How do we put a price on carbon
Opportunity Cost - defined as the benefit
emissions?Should we? Applied economics
you give upbecause you choose to take one
helps frame solutions for these questions.
action in favor of another.
 Behavioral Economics: How do we employ
-used to explain the principle of
economic insights and analysis with
comparative advantage.
cognitive psychology to predict how people
behave in specific contexts? Applied
Comparative advantage
economics shows us how. -is an economys ability to produce a
particular good or service at a lower
 Law and Economics: The two are inexorably opportunity cost than its trading partners.
intertwined. Laws codify ethics and markets, Comparative advantage is used to explain
and human behavior. Applied economics why companies, countries, or individuals
predicts how those laws are best can benefit from trade.
implemented.
 Marketing and Economics: Effective Absolute advantage
marketing relied on informed, evidence- -refers to the ability to produce more or
based decision-making. Consumer behavior, better goods and services than somebody
policy and ethics, market analysis, and else.
projecting profit-and-loss determine any
 To calculate comparative advantage, first
calculate the opportunity cost of
Entrepreneurship
a product or service. You can calculate the
opportunity cost by using the -sometimes referred to as enterprise. It represents
formula below: the factor that decide how much of and in what
Opportunity cost = (Quantity of good A for way the other factors are to be used in
Country X) / (Quantity of good B for [Link] return is profit.
Country X)

BASIC ECONOMIC PROBLEMS LESSSON 2

-3 economic problems that deal with the Methods Used in Interpreting Economic Data
production, distribution, and consumption of
Goods and Services. What is Economic analysis?

What to produce?-Relates to resources. The  provide a systematic approach for

availability of resources influences the evaluating the costs, benefits, and
decision on
what to produce. impacts of economic decisions.
How much to produce? -Focuses on the  “base of tools” with which the economists
actual production of goods and services and
the allocation of rsources. analyze economic problems.
For whom to produce? -Focuses on the
 extremely valuable in explaining economic
distribution and consuption of goods and
services. It is phenomenon, predicting economic events,
considered along with other business-
judging performance of the economy, and
related factors such as marketability and
pricing. in formulating economic policies.

FACTORS OF DISTRIBUTION
Land Steps in making Economic analysis or theory

-typically cultivated or improved for use in 1. Selecting the problem

production. Factor income on the use of land is 2. Formulation of hypothesis
rent. 3. Predictation
4. Testing of predictations
Labor
-human capital such as workers and employees that
transform raw material and regulate equipment to Deductive
produce goods and services. The factor return is  Starts with a general principle or theory and
wage. tests it with specific observations.
Capital  It's also known as the analytical, abstract, or
prior method.
-physical assets such as production facilities,
warehouses, equipment and technology used in the Steps:
production of goods and services. The term may 1. Formulate a hypothesis
also refer to investment capital used in production. 2. Defining of terms
Factor income is interest. 3. Deducing hypothesis from assumptions
4. Testing a hypothesis
  Predicts a positive relationship between
pricing and supply
Inductive
 Starts with specific observations and uses
them to form a general hypothesis or
theory.
LAW OF DEMAND
 It's also known as inductive reasoning or
bottom-up reasoning  Law of demand says that rising prices
 carried out in two forms, via statistics and reduce demand
experimentation.
Steps:
1. Observation Equilibrium Price
2. Data Collection
3. Data analysis  Also called as market clearing price
4. Formulate hypothesis

4 Basic Laws of Supply and Demand

Main branches of Economics
1. Prices fall when supply increases and
MICRO ECONOMICS demand remains constant
 examines individual or company level. 2. Prices fall when demand decreases and
 deals with household and firms supply remains constant
 Supply, demand, and equilibrium: Prices are 3. Prices rise when supply decreases and
determined by the law of supply and demand remains constant
demand. 4. Prices rise when when demand increases
 Production theory: This is thestudy of how and supply remains constant
goods and services are created or MACROECONOMICS
manufactured.
 Costs of production: The price of goods or Economic Growth: Economic growth is measured
services is determined by the cost of the by comparing GDP over time. This is calculated with
resources used during production, the basic formula:
according to this theory. Key principles:
 Labor economics: This principle
looks at workers and employers to  Unemployment: The number of people
understand patterns of wages, employment, who are able and willing to work
and income.  but are currently unemployed.
 Price stability: When prices increase at a
Law of Supply and Demand rate that doesn't affect economic decision-
-theory that prices are determined by the making.
relationship between supply and demand. If  Inflation: The change in the price level over
the supply of a good or service outstrips the time.
demand for it prices will fall. If demand  Real GDP: The total value of goods and
exceeds supply prices rise. services produced within a given period,
using constant price.
Equilibrium price -the price where supply  Consumer price index: The average
and demand meet change in prices paid by consumers over
time.
 Balance of payments: The balance of
LAW OF SUPPLY
 payments between an economy and the  it involves the method of central planning
rest of the world. where the government plans, directs, and
 Interest rates: The rate at which Interest is decides how resources will be allocated.
paid on loans.  Individuals have no or limited economic
 Foreign exchange rates: The rate at which freedom and private ownership is very
one currency is exchanged for another limited.
LESSON 3 Ex. North Korea
PHILIPINNE ECONOMY AND SOCIOECONOMIC 3. Mixed Economy
CHALLENGES  an economic system that combines the
features of free market and centralized
system
ECONOMY SYSTEM  there is a balance between private and
government accountability in achieving
 Refer to the different ways of managing a economic goals.
nations available resources to answer the  most industrialized countries have this type
three economic questions; what to produce, of economic systems.
how to produce, and for whom to produce.  Ex. USA, FRANCE, EUROPEAN COUNTRIES

Classified into four: Government intervention include:

1. Free Market Economy
1. Power to impose taxes
 is a system characterized by competition
2. Set trade limits and restrictions
and a high level of private ownership.
3. Implement legislations
 is based on supply and demand with little or
no government control. One of the central
4. Traditional Economy
principles of a free market is the concept of
 characterized by customs and habits.
voluntary exchange, which is defined as any
 not recognized as a form of economic
transaction in which two parties freely
system in the 21st century.
trade goods or services.
 currently, is limited to some nations in
Africa.
EX. New Zealand, Singapore, Japan, Israel,
UK,USA, Canada,Germany Barter-mechanism where goods are exchanged for
another good.
LAISSEZ FAIRE SYSTEM
 economic theory dating back to the 18th
century that opposes any government Macroeconomics Goal of a Country
intervention in business affairs.
 -French phrase translate to “leave alone or ECONOMIC GROWTH
more literally to “let you do”  typically measured through GDP
 GDP- the value of all final goods and
services that were consumed at a given
2. Central Economy period.
 also sometimes referred to as command
economy. BUSINESS CYCLE
 -is characterized by the heavy involvement  characterized by the upward and downward
of the government in managing the trend of the GDP observed over a period of
economy. time, usually years.
  An increase in GDP signifies growth or CENTRAL BANK
expansion while a decline signifies
 play a vital role in maintaining inflation at a
contraction.
reasonable level without hindering
economic activities that spur growth.
 uses monetary policy tools to
 Recession- typically a series of decline in
ensure inflation is within targets.
GDP.
 The highest point following an expansion is
THE PHILIPPINE ECONOMY
called the peak, while the lowest point
following a recession is trough. The upward
TheAquinoAdministration (2010-2016)
trend after trough is economic recovery.
 economy became “Rising Tiger” from
RECESSION being “sick man of Asia”
 2012: 6.9% growth vs 5.4% for
 period of economic downturn characterized developing economies
by high or increased unemployment, slow  2013: 6.8% growth vs 5% for
business, and a decline in consumer developing economies
purchase. Only subtle growth in 2011 (3.9%)
EXPANSION
The Duterte Era :A Shifting Dynamics
 features low or decrease unemployment,  Economy slowed down
increase production, and rise in consumer slightly
spending driven by higher income.  2018: 6.3% growth
DEPRESSION  2019: 6.1% growth

 a prolonged period of recession Impact of the US-China Trade War

FULL EMPLOYMENT  Increased tariffs led to higher costs globally
 Created Uncertainty For businesses
 mean zero unemployment, it is technically  Reduced trade volume
defined as having zero cyclical  Philippines Heavily reliant on global trade,
unemployment. was affected
CYCLICAL UNEMPLOYMENT Sectors affected by global trade in the Phil
 unemployment as a result of the business  Electronic
cycle  Machinery
 Agricultural products
PRICE STABILITY
Factors Behind the 2020 Contraction
 formally the absence of prolonged inflation
and deflation. [Link] sector affected by Covid-19:
Inflation
-continued price increase of goods and  Tourism
services that has negative consequences  Hospitality
Deflation  Retail
-continuous decline in prices and goods 2. Prolonged lockdown;
that contracts money supply and limits
liquidity.  business closure
 job losses
reduced economic activities
[Link] Diversification:
  technology

Beyond Politics: Other Economic Drivers

[Link] Filipino Workers (OFW) remittances
 Significant part of GDP
 Fuels domestic consumption and
investment
 Cushions economy against external shocks

[Link] BPO Industry's Contribution

 Major contributor to GDP
 Generates foreign exchange earnings
 Creates millions of jobs
 Reduces unemployment and
underemployment
3. The Government's Economic Role
 Sets rules for businesses
 Ensures fair competition
 Protects consumers
 Promotes environmental sustainability
 Tax incentives
 Development programs
 Protecting consumers
 Preventing overpricing
Socioeconomic Factors
 Socioeconomic factors define quality of life
in society
 Influence behaviors, attitudes, trends,
tastes, and lifestyles

Income's Impact on Business

 Amount of money earned from economic
activities
Education's Role in Society And Business
 Equips people with skills and knowledge for
employment
 Impacts employability and job prospects
Occupation and Its Influence
 Refers to types of jobs people perform
 Affects customers' ability to afford
products/services