Lesson 1 Economics As Social Science and Applied Science in Terms of Nature and Scope
Lesson 1 Economics As Social Science and Applied Science in Terms of Nature and Scope
AND SCOPE
According to Molina, J. A. & Nadal, G. J I (2020), economics is a SOCIAL SCIENCE concerned with
the explanation and prediction of observed phenomena in the society. Economics studies the way in
the societies solve the fundamental problems of reconciling the unlimited desires of individuals with
scarcity of resources, susceptible to numerous alternative uses. Economics is also an APPLIED SCIENCE
because it uses the scientific method in its explanations, which consists of observing reality and
presenting questions and problems to arrive at the formulation of theories and models. As an applied
science, it follows a systematic procedure to solve issues and problems of the society.
*Microeconomics: focuses on the behavior of individual economic units and the functioning of
markets. Its perspective focuses on parts of the economy: individuals, firms, and industries.
Microeconomics Macroeconomics
1. Consumers
*The agents interact among themselves in a specific territorial, social, natural and/or
cultural framework that determines their relationships → Market
LUXURY
GOODS –
goods man
the basic needs of man without, but may give comfort and
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Characteristics of Resources:
1. Scarcity: insufficient resources to supply all the desires and needs of individuals.
In the production of goods and services; there are issues that economics may encounter: these include:
for Land – inadequate land and natural resources; polluted areas; overcrowded spaces; for Labor –
unskilled workforce; mismatch of jobs; for capital - low quality of equipment/machines; insufficient
fund/capital; and for entrepreneurship – Inadequate training of entrepreneurs; limited opportunity;
scarcity of great ideas but many competitors in the market.
2. Multiple use: Resources can have more than one possible use. For example, a plot of land can be used
to plant coffee or to build a factory.
3. Partially replaceable: one resource can replace another in the production of a good or service (e.g.,
replace manual labor with technology).