Applied Economics Lesson 2, Slides of Economics

Download Applied Economics Lesson 2 and more Slides Economics in PDF only on Docsity! Economics as an Applied Science Prepared by: Melvin O. Alejandrino WHY APPLIED ECONOMICS IS CONSIDERED A SOCIAL SCIENCE? Because it includes different people and how they interact to one another with regards to goods and services. IMPORTANCE OF APPLICATION OF APPLIED ECONOMICS  Applying economics to a company, household or country helps sweep aside all attempts to dress up a situation so that it will appear better or worse than it is.  Applying economics as a mechanism to determine steps to improve current situation.  Applying economics can teach valuable lessons to avoid the recurrence of a negative situation. Cost and Benefit Cost – the price of product/service. Benefit – the advantage gained from a product/service. Cost and Benefit Cost can be expressed in terms of: Money, Time and Resources Marginal Cost vs Marginal Benefits  Marginal Cost - cost added by producing one additional unit of product or service.  Marginal Benefit – maximum amount the consumer is willing to pay for an additional good or service. MARGINAL In economics, it means to produce one more or additional. Marginal Benefit  For your merienda, you purchased a bowl of Palabok for P30.00 and you felt full. 5 minutes after, you were offered to eat Palabok for P30.00, of course you won’t buy it in the same price. Buying it for P20.00 or P15.00 might be a consideration for you.