MODULE 4 - FOURTH QUARTER TOPIC: SOCIO-ECONOMIC IMPACT STUDY

APPLIED ECONOMICS
OVERVIEW:

This module was designed and written with you in mind. It is here to help
you master the nature of Apply business principles, tools, and techniques in
participating in various types of industries in the locality. 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.
CONTENT STANDARD: Demonstrates understanding of … the law of supply and
demand, and factors affecting the economic situation.
PERFORMANCE STANDARD: Learners should be able… conduct a survey of macro
and
micro environments affecting business in a locality.
LEARNING COMPETENCY:
 Identify and explain the various socioeconomic factors affecting business and
industry (ABM_AE12II-e-g-11
 Various Socio-economic Factors
CONTENT: Affecting Business and Industry

1. What are the socioeconomic factors and how these affect businesses and
industry in general?

Business has to pass through various socioeconomic factors and has to be affected by
such factors in its will of making money or profit by producing or buying and selling products
in the form goods and services.

Socio-economic factors include all transactions that the business has to interact with
comprising land, labor, capital, and technology. Business could not operate without a rented
or owned real estate. It could not function without employing laborers, and providing
investment.
Furthermore, Socio-economic factors are considerations about how the business
itself operates from within taking into account the capital, capacity of business, the sources
or suppliers, the product to be produced, and the services to be offered, among others.
Socio-economic Factors Affecting Business also includes the practice of consumer
in using new products and services. If households are experiencing poverty alleviation
due to employment opportunities adding more to their income, there is a great tendency for
them to spend more money in the market place demanding new products and services.
Thus, businesses are doing well in the process producing sustainable employment in return
or even expansion of the same business or opening up another form of business catering
not just the basic needs but somehow luxurious wants of consumers.
The impact of the availability of raw materials or supply for business is another thing
that affects business. It is necessary to determine the investors’ needed capital and
expected income. If raw materials needed for supply become scarce there is a tendency for
business to increase the price employing the law of demand and supply to insure returns of
investment.
In a larger industry it may include the government intervention on taxes or its policy on
investment, and the import export dollar transactions that the business maybe dealing with.
If the policies of the government are favourable to foreign trade and relations, then outside
contacts and influence will be promoted but if government adopts “nationalistic” policies,
then it will close the country to foreign influence which in turn affect the viability of local
business and industries.

Other factors affecting business may include the following:

a. Payment of Government Taxes
Barangay, Municipal, or City permits, and real estate taxes, are paid in
local government units while value added tax, import-export duties,
income taxes are due to national government. Taxes paid by business
enterprise are considered a component of production cost because it is
added to capital outlay of the business in the operation.

b. Mode of the International Trade

Some businesses especially the medium and large scale enterprises
are usually affected by the dollar exchange rate in the economic
transactions, because it may directly affect the exports and imports cost of
products which in turn may directly or indirectly affect production cost and
the setting of the selling price.
2. How are You Going to Determine the Socio-Economic Status of Consumers as
a Factor Affecting Business or Industry?

Consumer’s Behavior and Its Significance on Business