Q4 Module 9
Q4 Module 9
Applied Economics
Quarter 2 – Module 9:
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What I Need to Know
This module was designed and written with you in mind. It is here to help you explain the
effects of the various socio-economic factors affecting business and industry.
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.
What I Know
Choose the letter of the best answer. Write your answer on a separate sheet of
paper.
1. Spending and saving are mutually exclusive which means that if income is fixed,
any change in household’s savings will inversely affect _________________.
a. Inventing c. Producing
b. Spending d. Buying
2. Changes in tax rates can clearly affect net income thus affect household
________________.
a. Investing c. Borrowing
b. Producing d. Spending
3. Businesses need the support of this industry to provide the tools needed to produce
goods/services.
a. Consumer c. Supplier
b. Entrepreneur d. Income
4. A successful business influences the behavior of ______________.
a. Capital c. Consumers
b. Supplier d. Entrepreneur
5. A rise in interest rates stimulate less spending, more __________________.
a. Spending c. Exploring Business
b. Business Transaction d. Savings
6. Distributor of goods and services needed in the operation of the business.
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a. Entrepreneur c. Consumer
b. Supplier d. None of the above
7. The unemployed spend less because of _________________.
a. Lower personal income c. High income
b. No income d. None of the above
8. Example of web – based business is an _________________.
a. e – Commerce c. Exporting
b. Hotel and Restaurant d. Importing
9. A increase in spending means ___________________.
a. More income c. Personal wealth
b. Economic growth d. All of the above
10. When consumers are likely to respond to promotional advertisements that connect
to their feeling to influence them, then the business _______________________.
a. Encourage customers to look for value
b. Influence consumers emotionally
c. Offer social responsibility
d. Change behavior with customer service
11. When consumers are likely to be influence to switch on your product when it meets
their expectations and get higher value.
a. Encourage customers to look for value
b. Influence consumers emotionally
c. Offer social responsibility
d. Change behavior with customer service
12. When consumers are likely to patronize your products and services when business
contribute to the community by being socially active such as scholarship and tree
planting.
a. Encourage customers to look for value
b. Influence consumers emotionally
c. Offer social responsibility
d. Change behavior with customer service
13. When business let customers feel that they are important and give an excellent
service then the business can ______________________.
a. Encourage customers to look for value
b. Influence consumers emotionally
c. Offer social responsibility
d. Change behavior with customer service
14. Below are list that company take into account in choosing the right supplier. Which
of the following does not belong to the group?
a. Quality of products/services provided c. Reliability of Service
b. Customer preference d. Supplier's Reputation
15. Which of the following is not a determinant of spending?
a. Expectations c. Interest Rates
b. Rates of Income Tax d. The Level of Production
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Lesson
1
Explain the Effects of the Various Socio-
Economic Factors Affecting Business and
Industry
What’s In
In the previous lesson, you have learned about industry and environmental analysis in particular SWOT
Analysis. As you go through the lesson, I want you to do a word search to check if you still remember
the following terms about socio economic factors affecting the business and industry.
R E C D I T I S R O S G N I V A S C E S M C
G N P O M E D S E G A T R O H S S H S E I I
S T N A N K M A C R O E C I N I M H C S X M
K A P L E S C O M M A N D N I M P O R T S O
E D A M C A U I T A L T R T D E O U F L D N
L A B O R M S M A R C I T E V I R S S E R O
G M I C R O E C E N T A X R S C O E I D O C
P I H S R I E N E R P E R E N E C H G S I E
P O S I L I V E E C O N O S I C S O D E V O
N O R P A T I V E E C O N T M I C L P O A I
G D S P E N D I N G E V I T A L E D O O H C
A U S O L U T E S S R O T S E V N I N E E O
S P S U P P L I E R S C O S T R A H I N B S
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Notes to the Teacher
The teacher should encourage the learners to read books in
Economics. This will help them to easily understand the lesson.
What’s New
To understand more about the socio economic factors affecting business and industry, Let
us read first a part of an article written by Manny Ayala of Rappler dated April 20,2020.
Entrepreneurs turn up
It is classic entrepreneurial stuff – see a problem and figure out how to solve it, whether or not you
have the resources to do it. Linda Rottenberg, the founder of the non-profit Endeavor, has a great
line that describes the situation neatly: “When economies turn down, entrepreneurs turn up.”
Mind you, these entrepreneurs have all been walloped as hard as the rest. As I write, most are going
through unprecedented declines in their business and are scrambling to conserve cash, reduce
expenses and pivot the business to be ready for the inevitable recovery from this pandemic.
But in the middle of this chaos, they have also been moved to do something concrete to help the
country.
Entrepreneurs are defined by how they respond to a crisis, which as the Chinese word for crisis
suggests is the co-existence of danger and opportunity. The great ones are those who find
opportunity in the face of danger. The great ones do right by all the stakeholders they serve:
employees, customers, shareholders, suppliers and the communities they operate in. The great ones
rise to the occasion when the moment demands it of them.
In the words of the Count of Monte Cristo – a man who lost everything then gained it back: “Life is a
storm, my young friend. You will bask in the sunlight one moment, be shattered on the rocks the next.
What makes you a man is what you do when that storm comes.”
Below is a list of some of the noteworthy initiatives I have seen in the little Endeavor community in
the Philippines. In the middle of a storm, this is how entrepreneurs rise to the occasion.
Abetina is the founder of Equilife Medical, a company that provides medical services and equipment
to ICUs in hospitals in the Philippines. When COVID-19 started to escalate, Abet and her
team scrambled to get all the critical care equipment at their disposal - such as ventilators - to the
hospitals that needed them most. As with all hospitals they have stepped up their efforts to send their
nurses, respiratory therapists and engineers into the frontline, at ng theigreat personal risk to
themselves.
After reading the article, you now have an initial idea about the lesson. But before we begin
the lesson, answer the following:
2. In your opinion, what are the social and economic factors that the business owners
considered in creating their business?
What’s New
This lesson will focus on various socio economic impacts on the following sectors such as
consumers, suppliers and households.
Understanding the socio economic factors affecting business will help you make better
decisions about the future and direction of your business. To have an intimate
understanding, however, you will have to understand both external and environmental
factors, as well as how their interplay affects your business.
Socioeconomic factors are, therefore, the social and economic factors that shape and
determine the dynamics a society will experience. These are the factors that affect the
behavior of a particular group, also known as socioeconomic class. Perhaps the most
interesting behavior of member of a socioeconomic class is their behavior as consumers.
Different socioeconomic classes will generally have different priorities, and this will affect
how they spent their money.
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Socio Economic Impact of Business- Consumers, Suppliers, and Households
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Factors that Impact Business and Consumer Confidence
With policymakers in the major economics working hard to restore and maintain
confidence levels and shifts in sentiment indicators playing a key role in risk
assessments of investors, it is worthwhile to consider the various influences on this
qualitative economic measure.
Several common factors that have the potential to cause marked shifts in sentiment
includes the following:
It is important to select suppliers carefully as suppliers can affect the businesses they
provide goods to. If a supplier provides a poor quality product to a firm, it may affect
the firm’s reputation as the firm will need to use the goods or sell them onto their
customers. Similarly, if a supplier provides a slow or poor service, this may slow down
the service the business provides to its customers.
Example: Does it have good cash flow and strong balance sheet?
5. Size of the Supplier and its other Customers.
Example: How much can the supplier comfortably provide and what is its
maximum?
Example: How quickly does the supplier expect payment and method of payment?
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Supplier Management
1. Household income – some goods are normal goods while others are inferior, so
increases in income encourage households to shift spending from goods with a
low income elasticity of demand, like food, to those with high income elasticity
of demand, like holidays.
2. Tastes and Fashions – over time spending on certain items that are ‘in fashion’
increase relative to those that go out of fashion.
3. Taxes and Subsidies – as indirect taxes and subsidies rise and fall, households
will be encouraged or discouraged from spending.
4. Relative Prices – as the prices of certain goods and services rise in relation to
others, household spending will adjust.
Determinants of Spending
Some extra spending is induced by changes in the current level of national income.
As income rise, customers tend to increase their spending on higher income elastic
goods and services, such as luxuries, holidays and leisure goods. When income falls
households may postpone spending on these luxuries until income rise again.
Spending and saving are mutually exclusive, which means that if income is fixed,
any change in household’s savings will inversely affect spending. Many of
determinants of consumption have an inverse effect on saving.
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3. Expectations
If households are confident, and have positive expectations about the future, current
spending can rise. This can lead to economic growth, and re – enforce the positive
expectations.
4. Unemployment
Unemployment has two potential effects on household spending. Firstly, the
unemployed spend less because of their lower personal income, and secondly,
unemployment causes negative expectations, even for those employed, and this can
act as a curb on spending and a stimulus to saving.
5. Rates of Income Tax
Changes in tax can clearly affect disposable, post – tax income, and hence affect
household spending.
6. Interest Rates
By altering the level of saving – a rise in interest rates will stimulate more saving,
and less spending.
By altering the cost of funding existing debts such as mortgages and bank loans. For
example, a rise in interest rates will divert household funds towards the higher loan
payments and away from general spending.
By altering the cost of new credit, and thus encouraging or discouraging household
borrowing. For example, a rise in interest rates will deter new borrows, who may
postpone borrowing until rate fall back.
By altering expectations and confidence. For example, rising interest rates will
subdue confidence and create a ‘wait and see’ attitude by households, who may
postpone certain spending until expectations improve.
What’s More
Activity 1. Below are logos of companies that are well known in the Philippines. I want you
to choose two (2) companies of your preference and answer the question: As a consumer,
what are the different factors that will make you buy their products or services? Write your
answer in a separate sheet of paper.
10 PT. RUBRIC 10 points- comprehensive and analytical 8-9 points- well written and some
includes analysis; 5-7 points-well written but lacks analysis; 2-4 points- weak essay; 1 point
Poorly written and lack strength
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Activity 2. Fill Me In
Instruction: This activity is called “FILL ME IN”. Your task now is to classify the given
descriptions inside the box to which they necessarily belong. You may indicate your
answers by writing on the space provided.
____________________ ____________________
____________________ ____________________
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What I Have Learned
Now, after discussing the lesson. I want you to answer the enumeration to test
your understanding about the lesson.
What are the factors that will lead the household to spend his/her money. Write
five (5) factors and explain each in the space provided below.
What I Can Do
In this part of the module, the teacher would like to know how you can apply the lesson in
real life situation.
ESSAY:
If you are a consultant in a business and the owners ask you recommend a supplier. What
kind of supplier will you recommend and why?
5 PT. RUBRIC
5 points Comprehensive and analytical
4 points Well written and some includes analysis
Well written but lacks analysis
3 points
Weak essay
2 points
Poorly written and lack strength
1 point
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Assessment
Choose the letter of the best answer. Write your answer on a separate sheet of
paper.
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8. The higher tax rate deducted on income will likely affect household
________________.
a. Investing c. Borrowing
b. Producing d. Spending
9. Businesses are reliant on this industry to provide materials/services to operate
their businesses.
a. Consumer c. Supplier
b. Entrepreneur d. Income
10. The business need to influence these individuals or companies to patronize their
products.
a. Capital c. Consumers
b. Supplier d. Entrepreneur
11. When household shift their spending due to increase in the price of goods then
this is a result of change in __________________.
a. Household income c. taxes and subsidies
b. taste and fashion d. relative price
12. When household over spending depends items bought because it’s trendy then
this is a result of change in_______________.
a. Household income c. taxes and subsidies
b. taste and fashion d. relative price
13. Individuals or companies that provide materials and tools needed in the
operation of the business.
a. Entrepreneur c. Consumer
b. Suppliers d. Investor
14. The unemployed cannot afford to buy more goods and services because of
_________________.
a. Lower personal income c. High income
b. No income d. Donations
15. A rise in spending means ___________________.
a. More income c. Personal wealth
b. Economic growth d. All of the above
Additional Activities
Directions. Below are some products of the well known industries in the
Philippines and to assess what you have learned match the materials needed to
produce the given products. Draw a line to match Column A and Column B.
Column A. Column B.
1. Jollibee Chicken Joy A. tea, milk, pearl
2. Goldilocks cake B. chicken, spices
3. Selecta Chocolate Ice Cream C. milk, chocolate, freezer
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4. Infinitea Milktea D. banana, tomatoes
5. Del Monte catsup E. flour, eggs, butter
Answer Key
6. B
5.A
7. A 6.D
8.A 7.B
9. A 8.D
10.B
9.C
11. A
10.C
12. C
11.D
13. D
12.B
14. B
15. D 13.B
14.A
15.A
References
Dinio and Villasis 2017: Applied Economics. Rex Bookstore, First Edition.
Leano, Roman D. 2016: Applied Economics for Senior High School. Mindshapers Co.,
Inc.
Competency Based Curriculum and CBLM 2019.Entrepreneurship
https://corporatefinanceinstitute.com/resources/knowledge/strategy/industry-
analysis-methods retrieval date June 10, 2020
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