Applied Economics: Quarter 1 - Module 2
Applied Economics: Quarter 1 - Module 2
Applied Economics: Quarter 1 - Module 2
APPLIED ECONOMICS
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.
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.
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 Let’s Try 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
examine the utility and application of applied economics to solve economic issues
and problems. 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.
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Let’s Try
Choose the letter of the best answer. Write the chosen letter on a separate sheet of
paper.
6. When one is making a choice, the cost of what one gives up is called _______
a. efficient market
b. economic problem
c. trade-off
d. opportunity cost
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Lesson Utility and Application of
Philippines has been encountering different economic problem; the problem on how
to make use of the limited and scarce resources available. Economic problems arise
due to unlimited needs and wants of people with only limited or scarce resources
available to satisfy them. This problem on limited resources make the concept of
choice and scarcity fundamental in the study of economics.
Scarcity signals the need to make choices and, trade-off is usually involved when a
choice is made. Thus, one has to give up something. The best alternative that
people forego, or give up, when making a choice or decision is called opportunity
cost.
This lesson helps you understand and examine the utility and application of
applied economics to solve economic issues and problems.
Let’s Recall
Activity 1:
Direction: Use the picture below to help you answer the following questions:
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4. What are people fighting over?
5. What appears to be the economic problem?
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Let’s Explore
Warm-up Activity:
Scenario:
You are on a desert island. Alone. You must survive. The island has only one food
source that you have found: pineapples. It takes you 2 hours to harvest and cut up
1 pineapple (you have no knife!). You also want to build your shelter. Each piece
takes you 3 hours to build.
You have only 12 hours of sunlight and need to complete your tasks by sundown.
How will you spend your hours? Record your decision on a separate sheet of paper.
Answer the following questions:
1. Think back to the Warmup Activity. Why did you spend your hours the
way you chose?
2. What limits did you face? What tradeoffs did you make?
3. How does scarcity (limited resources) affect our economy and ability to
produce?
Source: ©Mrs. P's Interactive Classroom 2019
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Let’s Elaborate
Scarcity is the main economic problem of the country because the limited
resources is not enough to meet the unlimited wants and needs of the people.
Because of scarcity, people make choices and in choosing something means you
need to give up something in exchange. As stated in the principles of economics,
“there’s no such thing as free”. Everything has its price. This concept is called
opportunity cost which measures the cost by what is given up in exchange. It also
measures the value of the foregone alternative. An example of opportunity cost is
that, when you choose between watching tv and reading a book, the option you do
not choose is your opportunity cost. So, if you choose to read, your opportunity
cost is watching tv – but if you do not really care about watching tv, your
opportunity cost is low.
Tradeoff is usually involved when a choice is made. Thus, one has to give up
something. The difference between tradeoffs and opportunity cost is that, every
time you make decision, there is probably a list of tradeoffs you make. The highest
value tradeoff is your opportunity cost.
Clothing Food
70 0
60 20
40 50
20 70
0 80
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A. Graph the Production Possibility Curve
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Types of relationships:
Example 2:
Look at the Production Possibilities Frontier graph below.
In this simplistic island economy, your main resource was your time. You
had to make decisions based on your limited time.
Question1: What is your opportunity cost of changing from obtaining 3
pineapples to obtaining 6?
Answer: It would cost you 2 pieces of shelter
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introduced new technology, discovered new resources, or there is an
increase in productivity.
Marginal Benefit: the difference (or change) in what you receive from a
different choice. The amount of benefit you receive from a particular good or
service is subjective; you may get more satisfaction or happiness from a
particular good or service than another.
How, then, do you decide on a choice? The answer is that you compare, to
the best of your ability, the marginal benefits with the marginal costs. Marginal
analysis is an important part of economic rationality and good decision-making.
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Let’s Dig In
Activity 2.
Directions: Using the x and y values, plot the points and graph the PPF. Label your
axes! Then answer the questions that follow.
X– Y-Values
Values (pounds of
(chairs) peanuts)
0 50
10 40
20 30
30 20
40 10
50 0
Source: ©Mrs. P's Interactive Classroom 2019
Let’s Remember
Direction: Match the term in column A to the statement in column B. Write your
answer on a separate sheet of paper.
COLUMN A COLUMN B
1. Trade-off A. there is no way of making anyone better off
2. Production possibilities B. giving up something to get something
curve C. technical means for producing goods
4. Efficient D. model to show tradeoffs for two goods
5. Inefficient E. missing the opportunity to produce more
6. Technology F. a sustained rise in output
7. Economic growth
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Let’s Apply
Activity 3.
Direction: Analyze the production possibilities frontier graph below and answer the
following questions.
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Let’s Evaluate
Choose the letter of the best answer. Write the chosen letter on a separate sheet of
paper.
5. A production possibilities curve is ‘bowed out’ from the origin because ______
a. specialization of output increases input potential
b. resources are scarce
c. wants are virtually unlimited
d. input resources are not equally efficient in producing two alternative
goods
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Let’s Extend
Activity 4.
Direction: Draw a Production Possibilities Graph for Toyota using the following
information. Write your answer on a separate paper.
A B C D E F G
Trucks 0 15 23 30 35 38 40
Cars 49 47 44 38 30 20 0
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Answer Key
Let’s Dig In
Let’s Evaluate
1. 30 lbs. of peanuts
1. B 2. 50 chairs
2. A 3. Inefficient
3. C 4. The economy would need to
4. C grow because (30,30) is beyond
5. D the PPF
5. True
6. Along the PPF, the economy is
functioning at a maximum
capacity which is efficient
Let’s Remember
1. B
2. D
3. A
4. E
5. C
6. F
References
Cruz, M. A. (2017). Business Economics, (pp 18-21). Mandaluyong City: Anvil
Publishing, Inc.
Laraya, J. De Leon J., & Santos, R. (2019), Applied Economics (pp. 19-26).
Mandaluyong: Books Atbp. Publishing Corp.
Tullao Jr, T. (2015). Understanding Economics in the Philippine Setting. (pp.
153-158). Quezon City: Pheonix Publishing House, Inc.
Viray Jr, E. & Avila-Bato, J., (2018). Applied Economics (pp. 9-20).
Mandaluyong: Anvil Publishing Inc.
@Mrs. P's Interactive Classroom 2019
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Development Team of the Module
Writers: Suzanne M. Paderna
Editors:
Content Evaluator:
Language Evaluator:
Reviewers: Joana Feliza P. Guevara
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
Schools Division of Taguig city and Pateros Upper Bicutan Taguig City
Telefax: 8384251