SHS Applied Economics: Socio-Economic Factors Affecting Business

SH
SHS
Applied Economics
Q2: Week 3-4: Module 2

ABM/GAS • Applied Economics
Grade 11/12: Quarter 2: Week 3-4: Module 2
First Edition, 2020
Copyright © 2020
La Union Schools Division
Region I
All rights reserved. No part of this module may be reproduced in any form without
written permission from the copyright owners.
Development Team of the Module
Author: Mary Ann D. Cacayuran, T-II
Editor: SDO La Union, Learning Resource Quality Assurance Team
Illustrator: Emelyn C. Hobayan, P II
Management Team:
Atty. Donato D. Balderas, Jr.
Schools Division Superintendent
Vivian Luz S. Pagatpatan, Ph.D
Assistant Schools Division Superintendent
German E. Flora, Ph.D, CID Chief
Virgilio C. Boado, Ph.D, EPS in Charge of LRMS
Lorna O. Gaspar, EPS in Charge of Applied Economics
Michael Jason D. Morales, PDO II
Claire P. Toluyen, Librarian II

3
3
Applied
Economics
Quarter 2: Week 3-4: Module 2

4
4
Target
Socio economic factors are important characteristics which mostly influence
consumers. These factors are associated with the quality of life and determine the
behaviors, tastes, preferences, attitudes and lifestyles of people living within a society.
Socio economic factors have a high impact on businesses, whether big or small.
This is because the consumers are often at the heart of businesses and tend to affect
growth of all ventures. There are many socio-economic factors that business persons
need to look out for in order to excel and compete effectively in an ever changing market.
In this lesson, you will be able to gain knowledge and better understanding
how socio-economic factors can affect business and industry.
After going through this module, you can attain the following objectives:
Learning Competency:
• Explain the effects of the various socio-economic factors affecting business
and industry (ABM-AE12II-e-g11)
Subtasks:
1. Define the various socio-economic factors affecting business and industry.
2. Discuss the various socio-economic factors affecting business and industry.
SOCIO-ECONOMIC FACTORS
AFFECTING BUSINESS AND
INDUSTRY
Module
2

5
5
Jumpstart
The first step to understanding what socioeconomic factors are is to
understand social economics. This is a specialized branch of economics that
concerns itself with studying the intimate relationship between economics and
social behavior. Such things as ethics, social norms and different social
philosophies have an impact on how consumers behave in an economy and the
eventual shape that economy will take.
The study of social economics seeks to predict what kind of results to expect
when the society has been changed. It does this by studying politics, history and
other social sciences.
Socioeconomic factors are, therefore, the social and economic factors that
shape and determine the dynamics a society will experience. These are factors that
affect the behavior of a particular group, also known as a socioeconomic class.
Perhaps the most interesting behavior of members of a socioeconomic class
is their behavior as consumers.
Different socioeconomic classes will generally have different priorities, and
this will affect how they spend their money.
In this activity, it will help you introduce the concept of socio-
economic impact of a business.

6
6
Pre-test
Direction: Read each item carefully. Use a separate sheet for your answers. Write
the letter of the best answer for each item. Answer in a separate sheet of paper.
1. Which of the following that study how economic activity affects and is shaped by
social processes?
A. Applied economics C. Psychology
B. Biology D. Socio-economics
2. This is an important factor to consider for any business involved in importation
and exportation of various goods and services.
A. Educational level C. Interest rates
B. Exchange rates D. Social status and income
3. It is a macroeconomic term that refers to a significant decline in general economic
activity in a designated region.
A. Educational level C. Recession
B. Interest rates D. Social status and income
4. It influences the type of occupation a person can get and ultimately their income level.
5. It attract more investors into the country and increase employment rates.
A. Economic growth C. Physical environment
B. Genetics D. Social support network
6. Such things as safe homes, workplaces that are healthy, safe drinking water,
clean air, wholesome communities and updated infrastructure are important
determinants of good health in a society.
7. It is the amount a lender charges for the use of assets expressed as a percentage
of the principal.
8. It plays a large role in their health, their lifespan and their probability of
contracting certain diseases.
9. It predisposes an individual to better health.
10. It includes support from family, friends and the community at large, which will
be predisposed to better health.

7
7
Discover
THE VARIOUS SOCIO-ECONOMIC FACTORS AFFECTING BUSINESS AND
INDUSTRY
Here is a closer look of these factors and their connection to businesses:
Interest Rates
The interest rate is the amount a lender charges for the use of assets expressed
as a percentage of the principal. The interest rate is typically noted on an annual
basis known as the annual percentage rate (APR). The assets borrowed could include
cash, consumer goods, or large assets such as a vehicle or building. Interest rates
are everywhere, and are imposed by many different people. In fact, banking
institutions are obsessed with knowing what the status for interest rates in the
economy is for a good reason. It is how they determine their lending practices. It is
also good information for a company that relies on debt capital to finance ambitious
projects.
Exchange Rates
An exchange rate is the value of one nation's currency versus the currency of
another nation or economic zone. This is a slightly more nuanced topic than that of
interest rates. At the heart of it, exchange rates are an important factor to consider
for any business involved in importation and exportation of various goods and
services. When exchange rates fluctuate, they affect the ability of a company to pay
its international suppliers in a satisfactory manner. This can also affect the profit
margin of the company, as well as the amount of resources it needs to stay afloat.
Recession
A recession is a macroeconomic term that refers to a significant decline in
general economic activity in a designated region. It had been typically recognized as
two consecutive quarters of economic decline, as reflected by GDP in conjunction
with monthly indicators such as a rise in unemployment. However, the National
Bureau of Economic Research (NBER), which officially declares recessions, says the
two consecutive quarters of decline in real GDP are not how it is defined anymore.
The NBER defines a recession as a significant decline in economic activity spread
across the economy, lasting more than a few months, normally visible in real GDP,
real income, employment, industrial production, and wholesale-retail sales.
Whenever an economy faces a recession, it has the potential to change the
attitude taken by consumers toward their purchasing decisions. This may force
companies to drop prices to stay afloat.

8
8
Social Status and Income
Having a high social status and an above average income predisposes an
individual to better health. In fact, lots of studies have shown that as the gap
between the rich and the poor increases, so does the gap between their levels of
health.
Income capacity of consumers determines how much they can spend on certain
products. If citizens in a country have access to high incomes from employment and
personal business ventures, then they are more likely to spend on luxurious products.
This is because they can easily afford the products and also have a taste for good things.
On the other hand, low income earners may not be able to afford basic commodities, let
alone the luxurious products. The struggle to meet their basic needs may blind these
consumers from purchasing luxurious products.
It is thus essential for a business person to consider the income capacities of the
consumers before setting up the business. This factor should affect where the
entrepreneur sets up shop and the target clients he chooses. For high end products, an
entrepreneur should look for a shop in an up market area with access to high income
earners. For basic commodities, an entrepreneur should look for cheap suppliers and
set up shop near the low income earners.
The occupation of consumers is largely related to the income they earn. Low
skilled laborers who work in menial jobs cannot earn the same as corporate managers.
The differences in occupations more often than not determine the income gaps of the
consumers. As an entrepreneur you must carry out research on the occupations of your
consumers. This should influence your decision to venture into certain businesses with
a specific target at consumers who have good occupations or lowly jobs.
Education Level
It is also commonly observed that the level of education is directly linked to
health. Communities with low average education levels tend to have poorer health,
overall. Low education levels are also linked to lower self-confidence and more
stress. Education levels influence the type of occupation a person can get and ultimately
their income level. Consumers with higher education tend to be skilled and also have
better jobs and incomes as compared to those without education. Education is
determined by the opportunities presented to the consumers and can influence how
much a consumer can afford.
In addition to this, the educated consumers have different tastes for products as
compared to the uneducated ones. The educated consumers are not only more
conscious about the contents of products but may also come off as demanding as
compared to the less educated ones. An entrepreneur may have to work harder to fulfill
the demands of these consumers as compared to when dealing with less educated folk
who are less demanding.

9
9
Physical Environment
Such things as safe homes, workplaces that are healthy, safe drinking water,
determinants of good health in a society. Of particular relevance to businesses is
the working conditions of those who are employed. The mere fact of being employed,
to begin with, predisposes an individual to better health. Also, the more control an
individual has over her working conditions, the better her health.
Social Support Network
When individuals have lots of support from family, friends and the
community at large, they will be predisposed to better health. More support factors
include the culture of the community, such as traditions, beliefs and customs. The
improvement of these factors can lead to the improvement of the health of the
community.
Genetics
Genetics is the study of genes and inheritance in living organisms. This branch
of science has a fascinating history, stretching from the 19th century when scientists
began to study how organisms inherited traits from their parents, to the present day
when we can read the “source code” of living things letter-by-letter. People's genetics
play a large role in their health, their lifespan and their probability of contracting
certain diseases. There are also other personal factors that affect health, such as a
person’s coping skills and behavior. Do they keep active? Do they smoke? Do they
drink alcohol? How do they deal with stress? All of these things have an impact on
the health of an individual.
Economic growth
Economic growth and development of a country can also have an impact on the
social status of its citizens. Emerging economies such as China and India have proved
that if a country experiences high economic growth then the citizens may have better
access to incomes and also the middle class and upper class may grow. This may also
attract more investors into the country and increase employment rates. Inevitably
positive economic growth rates will increase spending and help businesses to grow.

10
10
Explore
Activity Assessment 1 Check your Understanding!
Directions: Read the sentences carefully. Identify the word or phrase that is
appropriate to each item. Copy and answer in a separate sheet of paper.
1. __________ of consumers determines how much they can spend on certain products.
2. __________ influence the type of occupation a person can get and ultimately their
income level.
3. More _______________ include the culture of the community, such as traditions,
beliefs and customs.
4. ________________ are important factors to consider for any business that involves
in importation and exportation of various goods and services.
5. _______________ are everywhere, and are imposed by many different people. In
fact, banking institutions are obsessed with knowing what the status for interest
rates in the economy is for a good reason.
Activity Assessment 2
Direction: Read each statement carefully. Write TRUE if the statement is true and
write FALSE if it is false. Copy and answer in a separate sheet of paper.
______ 1. People's genetics play a large role in their health, their lifespan and their
probability of contracting certain diseases.
______ 2. Whenever an economy faces a recession, it has no potential to change the
attitude taken by consumers toward their purchasing decisions.
______ 3. It is thus essential for a business person to consider the income capacity of
the consumers before setting up the business.
______ 4. Education is determined by the opportunities presented to the consumers and
can influence how much a consumer can afford.
______ 5. Such things as safe homes, workplaces that are healthy, safe drinking
water, clean air, wholesome communities and updated infrastructure are important
Here are some enrichment activities for you to work on to master and
strengthen the basic concepts you have learned from this lesson.

11
11
Activity Assessment 3
Direction: Discuss the following questions briefly and concisely. Use a separate
sheet of paper for your answers. (10 points each)
1. Why socio-economic factors have a high impact on businesses, whether big or small?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
2. How is the social status and income of a consumer predisposes an individual to
better health?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
3. What is the impact of recession in our economy?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
4. How is education level impact the lives of consumers?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
5. What will happen if exchange rate fluctuate?
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________

12
12
Deepen
At this point, you are now ready to apply your knowledge of what you
had learned about the socio-economic impact of a business.
1. Interview a typical mother or housewife in low-income community on how
she budgets the income of her family. Further, ask her if said family budget can still
provide for some amenities (e.g., cellphone load, DVDs) and if so, how much and
what kind? Look around the said community and find the kind and number of micro
enterprises serving its consumer needs. Identify their market problems and figure
out what you would do if you were in their shoes. (10 points)
2. Look for a successful small business in your neighborhood. Interview the
owner, find out the reasons for putting up the business, the problems encountered,
and the reasons for its success. (10 points)
3. Observe and talk to the small producers/sellers in your barangay (farmers,
fishermen, and vendors cottage industries). Is there any lack of public infrastructure
facilities that limits their operation? How this inadequacy limits their business
activities and profit? What support services do they lack and how has this limited
their business activities and profit? Have they experienced registration and licensing
delays and how they have limited their business activities and profit? What are the
possible ways to explore to minimize or even avoid the aforementioned impact? (10
points)
You will be graded using the rubric below:
Poor (5-6 pts.) Good (7-8 pts.) Excellent (9-10 pts.)
Interview
Questions
Learner generated
basic questions
about the owner
and his/her
business.
Learner generated
questions about the
owner and her
business that
paralleled on another.
Questions were simple,
but directly related to
the business and its
owner.
Learner generated in-depth
questions about the owner and
his/her business. Questions
reflected prior research and
knowledge of the business,
allowing the owner to
elaborate with detail. Some
questions were added during
conversation.
Record of
Answers
Learner gathered
limited information
from the interview.
Learner gathered
adequate information
from the interview.
Learner paid attention
to details.
Learner gathered an abundant
amount of information from
interview. The owner's voice is
heard in the responses.
Report Learner takes
interview questions
and responses,
writing one to two
paragraphs about
the experience.
Learner create a short
essay based on
interview. Essay is very
simple and lacks any
personality.
Learner created an energized
essay based on the interview.
The essay reflects the voices of
both the learner and the
business owner.

13
13
Gauge
Post-test
Direction: Read each item carefully. Use a separate sheet for your answers. Write
the letter of the best answer for each item. Answer in a separate sheet of paper.
1. What the social science that studies how economic activity affects and is shaped
by social processes?
A. Applied economics C. Psychology
B. Biology D. Socio-economics
2. This is an important factor to consider for any business involved in importation
and exportation of various goods and services.
3. It is a macroeconomic term that refers to a significant decline in general economic
activity in a designated region.
A. Educational level C. Recession
B. Interest rates D. Social status and income
4. It influences the type of occupation a person can get and ultimately their income level.
5. It attract more investors into the country and increase employment rates.
6. Such things as safe homes, workplaces that are healthy, safe drinking water,
7. It is the amount a lender charges for the use of assets expressed as a percentage
of the principal.
Great job! You have understood the lesson. Are you now ready to
summarize?

14
14
8. It plays a large role in their health, their lifespan and their probability of
contracting certain diseases.
9. It predisposes an individual to better health.
10. It includes support from family, friends and the community at large, which will
be predisposed to better health.

15
15
Key
Answer
Subtasks
1.
Interest
Rates
-
Interest
rate
is
the
amount
a
lender
charges
for
the
use
of
assets
expressed
as
a
percentage
of
a
principal.
It
is
typically
noted
on
an
annual
basis
known
as
the
annual
percentage
rate
(APR).
The
assets
borrowed
could
include
cash,
consumer
goods,
or
large
assets
such
as
vehicle
or
building.
2.
Exchange
Rates
-
Exchange
rates
are
an
important
factor
to
consider
for
any
business
involved
in
importation
and
exportation
of
various
goods
and
services.
When
exchange
rates
fluctuate,
they
affect
the
ability
of
a
company
to
pay
its
international
suppliers
in
a
satisfactory
manner.
This
can
also
affect
the
profit
margin
of
the
company,
as
well
as
the
amount
of
resources
it
needs
to
stay
afloat.
3.
Recession
-
A
recession
is
a
macroeconomic
term
that
refers
to
a
significant
decline
in
general
economic
activity
in
a
designated
region.
Whenever
an
economy
faces
a
recession,
it
has
the
potential
to
change
the
attitude
taken
by
consumers
toward
their
purchasing
decisions.
This
may
force
companies
to
drop
prices
to
stay
afloat.
4.
Social
Status
and
Income
-
Income
capacity
of
consumers
determines
how
much
they
can
spend
on
certain
products.
If
citizens
in
a
country
have
access
to
high
incomes
from
employment
and
personal
business
ventures,
then
they
are
more
likely
to
spend
on
luxurious
products.
This
is
because
they
can
easily
afford
the
products
and
also
have
a
taste
for
good
things.
On
the
other
hand,
low
income
earners
may
not
be
able
to
afford
basic
commodities,
let
alone
the
luxurious
products.
The
struggle
to
meet
their
basic
needs
may
blind
these
consumers
from
purchasing
luxurious
products.
5.
Education
Level
-
It
is
also
commonly
observed
that
the
level
of
education
is
directly
linked
to
health.
Communities
with
low
average
education
levels
tend
to
have
poorer
health,
overall.
Low
education
levels
are
also
linked
to
lower
self-confidence
and
more
stress.
6.
Physical
Environment
-
Such
things
as
safe
homes,
workplaces
that
are
healthy,
safe
drinking
water,
clean
air,
wholesome
communities
and
updated
infrastructure
are
important
determinants
of
good
health
in
a
society.
7.
Genetics
Genetics
is
the
study
of
genes
and
inheritance
in
living
organisms.
People's
genetics
play
a
large
role
in
their
health,
their
lifespan
and
their
probability
of
contracting
certain
diseases.
8.
Economic
Growth
-
This
may
attract
more
investors
into
the
country
and
increase
employment
rates.
Inevitably
positive
economic
growth
rates
will
increase
spending
and
help
businesses
to
grow.

16
16
Pre-test
1.
D
2.
B
3.
C
4.
A
5.
A
6.
C
7.
C
8.
B
9.
D
10.
D
EXPLORE
Activity
Assessment
1
1.
Income
capacity
2.
Education
levels
3.
Support
factors
4.
Exchange
rates
5.
Interest
rates
Activity
Assessment
2
1.
TRUE
2.
FALSE
3.
TRUE
4.
TRUE
5.
TRUE
Activity
Assessment
3
1.
This
is
because
the
consumers
are
often
at
the
heart
of
businesses
and
tend
to
affect
growth
of
all
ventures.
There
are
many
socio
economic
factors
that
business
persons
need
to
look
out
for
in
order
to
excel
and
compete
effectively
in
an
ever
changing
market.
2.
Income
capacity
of
consumers
determines
how
much
they
can
spend
on
certain
products.
If
citizens
in
a
country
have
access
to
high
incomes
from
employment
and
personal
business
ventures,
then
they
are
more
likely
to
spend
on
luxurious
products.
This
is
because
they
can
easily
afford
the
products
and
also
have
a
taste
for
good
things.
On
the
other
hand,
low
income
earners
may
not
be
able
to
afford
basic
commodities,
let
alone
the
luxurious
products.
The
struggle
to
meet
their
basic
needs
may
blind
these
consumers
from
purchasing
luxurious
products.
3.
Whenever
an
economy
faces
a
recession,
it
has
the
potential
to
change
the
attitude
taken
by
consumers
toward
their
purchasing
decisions.
This
may
force
companies
to
drop
prices
to
stay
afloat.
4.
Education
levels
influence
the
type
of
occupation
a
person
can
get
and
ultimately
their
income
level.
Consumers
with
higher
education
tend
to
be
skilled
and
also
have
better
jobs
and
incomes
as
compared
to
those
without
education.
Education
is
determined
by
the
opportunities
presented
to
the
consumers
and
can
influence
how
much
a
consumer
can
afford.
5.
When
exchange
rates
fluctuate,
they
affect
the
ability
of
a
company
to
pay
its
international
suppliers
in
a
satisfactory
manner.
This
can
also
affect
the
profit
margin
of
the
company,
as
well
as
the
amount
of
resources
it
needs
to
stay
afloat.

17
17
DEEPEN
Use
the
given
rubric
to
grade
your
learners.
GAUGE
Post-test
1.
D
2.
B
3.
C
4.
A
5.
A
6.
C
7.
C
8.
B
9.
D
10.
D

18
18
References
DO 30
#30, s.
2019
Books
Applied Economics (First Edition),
Dinio, Rosemary P., Ph.D. &
Villasis, George A., Rex Bookstore,
2017
Online and Electronic Sources
https://smallbusiness.chron.com
/socioeconomic-factors-affecting-
small-businesses-73234.html
https://www.essaysexperts.net/bl
og/defining-important-socio-
economic-factors-affecting-
businesses-today-sample-essay/
https://www.slideshare.net/goshg
eminian/socio-economic-
problems-presentation
https://www.investopedia.com/t
erms/r/recession.asp

SHS Applied Economics: Socio-Economic Factors Affecting Business

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to SHS Applied Economics: Socio-Economic Factors Affecting Business

Similar to SHS Applied Economics: Socio-Economic Factors Affecting Business (20)

Recently uploaded

Recently uploaded (20)

SHS Applied Economics: Socio-Economic Factors Affecting Business