Learning Kit English

LEARNING KIT
I. TITLE
 Subject: Applied Economics 12
 Time Frame: 2 Days (Week 1)
II. OVERVIEW
This Learning Kit will give you the basic description of economics and how it may help a student in
better decision making. This is equipped with various activities that will help you to analyze the
basic principles of economics.
III OBJECTIVE:
At the end of the lesson, the students should be able to:
 Differentiate economics as social science and applied science in terms of nature and scope.
 Define Applied Economics and understand the basic terms in applied economics.
IV CONTENT
A. ENGAGE – Let’s Have Fun!
Answer the question below.
1. What decisions have you made since waking up this morning? For instance, did you choose to get up as soon
as the alarm went off or to sleep more? Did you wonder what to do after all your lessons for today?
2. Create a simple plan on how you spent the day in doing your activities. Fill up the table below.
Time Activities
B EXPLORE – May I Know your Idea?
 As a student, determine the following whether if it is a need or a want, then explain why you think it is a
need or a want
 Food –
 Cellphone –
 Make-up -
 Car
 Fine Dining/ Luxury Restaurant –
 As a student, how will you differentiate a need form a want? Is it possible that a need becomes a want or
vice versa? In what possible reason this may occur?
 Go and read the article in https://business.inquirer.net/264005/un-sees-philippine-economy-to-grow-6-5-in-
2019 , the answer the following question
 What is the article all about?
 How can you compare the economic standing of the Philippines based on the article from
the previous year?
 What do you think the government gave up to gain such success?
C. EXPLAIN – Let’s Start!

The Study of Economics
Economics is everywhere. You may not be aware of it but in simple decision has the very same
foundation of economics. You action you take involve some sort of analysis where you weigh the pros and
cons. This behavior underlies the study of economics. In simple definition, Economics is a science that deals
with how people use their limited resources despite of their never ending needs and wants.
Economics as an Applied Science

The application of economic theories and models in real life. It consists of learning how choices
affect individual decision-making and how the availability of factors aid decision makers craft sound
judgement. Economists have worked to simplify complex social phenomena into laws, frameworks, and models
over the centuries.
Scarcity, Needs and Wants

The very core of economics it the efficient allocation of limited resources. It produces two
underlying assumptions. First is that people have unlimited needs and wants. Second is the concept of scarcity
which means resources are limited.
Opportunity Cost and Comparative Advantage

Opportunity cost is defined as the benefit you gave up because you choose to take one action in
favor of another. Opportunity benefit is the one you gain over another. Opportunity cost is essential in the
study of economics because individuals, firms and the government are always faced with choices.
Comparative advantage means having lower opportunity cost. Absolute advantage is having
the ability to produce more output compared to other entity.
Country A Country B
Wine Wine
9
8
3 2
Coffee Coffee
Based on the graph above, Since Country A has a greater production of both goods, it can be said that
country A has absolute advantage over country B. In terms of comparative advantage, there is a need to
calculate the opportunity cost for each country if the countries have to specialize in the production of only one
good.
 What is the opportunity cost for each country in producing only wine?
3
Wine (Country A) = or 0.333 bag of coffee
9
2
Wine (Country B) = or 0.25 bag of coffee
8
 What is the opportunity cost for each country in producing only coffee?
9
Coffee (Country A) = or 3 barrels of wine
3
8
Coffee (Country B) = or 0.25 barrels of wine
2
If both countries have to focus in the production of wine, Country B turns out to have lower opportunity
cost. This means that the benefit it has to give up is lower (0.25 bag of coffee compared to 0.333 bag).
Therefore, Country B has a comparative advantage in the production of wine.
In contrast, if both countries will focus their resources in the production of coffee, Country A ends up
having lower opportunity cost. It only needs to give up three barrels of wine compared to Country B’s four
barrels.
Opportunity cost and Comparative advantage paves way to specialization and trades. A country’s choice
to specialize in the production of good or service is driven by availability of economic resources. Trade and
specialization is not limited to products. Labor and manpower may also be a source of specialization and trade.
D. ELABORATE – Practice Time!

Direction: Analyze the output schedule below. Plot the corresponding graphs of the outputs of the two
countries. Calculate the opportunity costs. Then find out which product each country should specialize in. Write
your answer on the space provided.
Output Schedule Before Specialization

COUNTRY Dried Mango (kg) Chocolate (kg)
Philippines 200 150
Indonesia 120 130
A. GRAPHS
Philippines Indonesia
B. Opportunity Cost (Computation)
C. Specialization (Where should each country focus their production? Explain your answer)
E. EXPLAIN – What I Have Learned?
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LEARNING KIT

A. ENGAGE – Let’s Have Fun!

Answer the question below.

B EXPLORE – May I Know your Idea?

C. EXPLAIN – Let’s Start!

Economics as an Applied Science

Scarcity, Needs and Wants

Opportunity Cost and Comparative Advantage

D. ELABORATE – Practice Time!

Output Schedule Before Specialization

B. Opportunity Cost (Computation)

E. EXPLAIN – What I Have Learned?

Log in to your GENYO Acoount.

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