APPLIED ECONOMICS

Quarter 2 -Module IX
EFFECT OF THE VARIOUS SOCIOECONOMIC
FACTORS AFFECTING BUSINESS AND INDUSTRY

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Applied Economics – SHS
Quarter II – Module 9.1: Effect of the Various Socio-economic Factors Affecting
Business and Industry

Republic Act 8293, section 176 ​states that: No copyright shall subsist in any work of the
government agency or office wherein the work is created shall be necessary for exploitation such
work for profit. Such agency or office may, among other things, impose as a conditional the payment
of royalties.

Borrowed materials (i.e.., songs, stories, poems,, pictures photos, brand names, trademarks,
etc.) included in this book are owed by their respective copyright holders. Every effort has been
exerted to locate and seek permission to use these materials from their respective copyright
owners. The publisher and authors do not represent nor claim ownership over them.

Regional
Director:
Gilbert
T.
Sadsad
Assistant
Regional
Director:
Jessie L.
Amin

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 SOCIOECONOMIC IMPACT

Part of owning a business is listening to the needs and wants of our consumer, taking
consideration of where we will get the products or raw materials for productions or for selling, as
well as to where or from whom we will get the fund to start the business. Aside from the suppliers,
consumers and investors, we do also consider the government who also plays a big role in
establishing our business. If our business does engage in international trades and markets, it may
also affect the business itself. Thus, understanding the various socio-economic factors in a business
is one of the important considerations for an entrepreneur.

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 ✔ Explain the effect of the various socio-economic factors affecting business and
industry.

● Consumers​ are people or organizations that purchase products or services. ​They are
humans or other economic entities that use a good or service. Furthermore, they do not
sell on that item that they bought.
● Households consist of one or more people who live in the same ​dwelling​ and share
meals. It may also consist of a single ​family​ or another group of people.
o https://en.wikipedia.org/

● Utility is the satisfaction or benefit received from consuminga good or service;

● Marginal utlitiy(MU) is the change in total utility from increased consumption of that good
or service.
● Total Utility(TU) is the summation of one’s satisfaction
● Standard of Living is the level of wealth, comfort, and material goods available to an
individual, community, or social class in a certain geographic area.
● Suppliers are resources of raw materials used in producing goods/services.
● Raw material goods are unprocessed goods used to produce other goods.
● Intermediate goods are semi-processed goods used to produce other goods,
● Final Goods are processed and transformed goods ready for use and consumption.
● Savings are what left from your income after you purchase goods and services.
● Start-up capital is the initial capital or money a business needs to facilitate it costs.

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 ● Add-up capital is used for the expansion of the business, adding to the size of the
factory, buying more equipment or adding laborers.

Gadgets such as tablets, mobile phones, and laptops are some of the most popular products
among consumers nowadays. Manufacturers regularly come up with different designs and functions
to suit
the
needs of
their

consumers.
On a piece of paper write down your answer to the following questions.

Question Answer
Consumer

1. What gadgets do you use?

2. Are you satisfied with your

gadgets?

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 3. What features do you look for in
gadgets?

4. What features do you want to

see in gadgets sold in the
market?

Suppliers and Investors:

1. In your opinion, what role do

suppliers play in the economy?

2. What role do investors play in

the economy?

3. How does the existence of

suppliers and investors
encourage businesses?

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 The various sectors that are being affected by the socioeconomic impact of
business are listed below. Some of them were already mentioned in the preceding activity.

- Consumer and Households

- Supplier and Investors
- Government
- International trade

In this module we will be focusing on the two factors such as Consumers and
Households and Suppliers and Investors.

THE ROLE OF CONSUMER IN THE ECONOMY

Consumer often determines what kinds of products and services are to produce.This
information goes to the producer and from this information products and services are made.
The innovative products sold online or on TV shopping programs. These innovative products
are the result of extensive research and development all coming from consumers reactions to
shortcoming of existing sellers and what consumers hope for in buying future products.
One example is the non-stick pan. This product was conceptualized because of the typical
scenario where food got stuck on your pan. When
the non-stick pan was produced, its durability became an
issue among consumers-the non-stick component would
eventually wear off. This information went back to the

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producers and sellers of the product until someone came up with a more durable non-stick pan
made of a different material. The new material is embedded into the pan rather than merely
“sticking” onto it. The product can only be bought at certain stores, which is also marketing strategy
of the seller.

Take a Look at this!

1. What can you see in the pictures?

I can see different innovative models of cellphones that are continuously changing
through time to address the needs and demands of the consumer.
2. Why do you think touch screen cellphone was invented?
_________________________________________________________________________
_____________________________________________________________
3. What is the advantage of using a touch screen cellphone over the pager and a
non-touch screen cellphone?
_________________________________________________________________________
_____________________________________________________________

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 Another role of the consumer in the economy is that their consumption creates additional
jobs. Companies that offer Business Process Outsourcing or Information Techonology Enabled
Services(ITES) do things for other companies such as managing payroll accounts, human
resources and providing customer services.

When you use your credit card in buying mechandise, you are contributing to the growth of
this business sector because the customer and call center need of your card are provided by a
BPO. Therefore, you are contributing to the creation of additional jobs. Patronizing local products
gives small businesses the opportunity to expand, and expansion needs additional workforce.

THE ROLE OF HOUSEHOLD IN THE ECONOMY

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 Figure 1 shows the participation or role of households in the economy. There are

several stages of participation of different parties involved. Identification of such is merely

done by looking at where the arrows are pointing.

1. The arrow going from households to firms is considered the first stage of
participation. Thus, ​households bring economics resources such as land,
labor,capital and entrepreneuship to firms, and these resources are used to make
goods and services.

a. Land as the source of all natural resources used in production.

Examples:Agricultural Output such as rice,corn and other grains. Poultry and
livestock,fishing and aquaculture are also included. These examples are
considered the bulk of our food source.

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 b. Labor which includes manpower and skills.

c. Capital” or in Economics, the man-made factor of production used to create

another products. ​Example: Machinery and Equipment.

d. Entrepeneurs, the one who combine the other resources to come up with new
products.
Included in the first stage is the 2​nd arrow that also points to the firm. This is
where households contribute to ​consumption​,which is the act of buying goods
and services. An increase in Gross Domestic Product is often due to an increase
in consumption.

2. The second stage is the contribution of households to banks. The arrow pointing to

banks indicates savings, and these are sources of investments. Investments include
ventures that have potential earnings. Investments maybe long-term or short-term.

What is the example of long term investments?

Buying properties is considered long term investment because their value

appreciates as years go by.

What is the example of short term investments?

Buying stocks is a short term investment because they can appreciate in a

single-day-buying and selling stocks at the right time can result in considerable
earnings.

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 3. The third stage is the cycle of paying taxes to the government, which the
government, in turn, uses to fund its expenditures, including constructing
infrastracture, paying the national debt, and hiring people, such as sweepers, traffic
aids, public officials, policemen, public school teachers, firemen, and sanitary
inspectors to render work for the government.

4. The fourth stage is the importation of goods from the rest of the world. Some may
consider this a negative factor, as importation uses valuable financial resources.
However, it can also establish good rating relations with other countries.

HOW BUSINESSES AND INDUSTRIES IMPACT CONSUMERS AND

HOUSEHOLDS
New products and services affect consumer behavior in several ways.The following are the
several approaches with regard to the impact of consumers and households to businesses and
industry.

1. The Utility Approach is guided by the Law of Diminishing Marginal Utility, which states that as
you consume a good or a service given a particular period of time, you received less and less
marginal utility for each additional unit consumed. It also states that the greatest marginal utility
is achieved on the first unit of the said good/service. Utility is measured in units called utils.

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 As you can see the Marginal Utility is decreasing since the more you received same goods,
the less you become satisfied.

On the other hand, Total Utility can be computed by simply adding all the marginal utilities.

For example, the total utility at quantity 2 is 19, which is the sum of the marginal utliity of
quantities 1 and 2. The total utility at quantity 3 is 26, which is the sum of marginal utility of
quantities 1,2,and 3.

Table 1. MU and TU of Fried Ice Cream

Quantity MU TU

0 0 0

1 10 10

2 9 19

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 3 7 26

4 4 30

5 0 30
6 -4 26

The Law of Dimishing Marginal Utility can be illustrated through the graphical
presentation in Table 1.

F​igure 2 above is the graphical representation of Table 1. Marginal Utility is colored black
while the total utility is colored gray. The black line explains that you received less and less
utility as you consume more of the said good/service. MU starts at 10, then decrease to 9,
then to 7, and so on. The black line also explains that Q1 gives the greatest satisfaction per
unit, which is equal to 10. The gray line explains at what point the consumer gets maximum
utility which is the highest total utility. It appears that TU=30 is the maximum, which is at
Q4-Q5. The rule is where MU=0 and TU at maximum is known as maximum utility =, in this
case it is at Q5.
1. The second approach is the analysis of the Budget Line, Indiferrence Curve and
getting the Optimum Combination. Given two substitute goods the consumer gets
both equally, provided that the prices and utilities of the two are the same.

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 Products can be substituted or complemented. Substitute goods are those that can
replace each other, like butter and margarine. Complementary goods are those items that
need other items for better use, like toothpaste and toothbrush; refillable lighter and lighter
fluid, among others.
Consumer tends to seek the optimum combination, provided that goods x and y are
substitute goods and both give the same level of satisfaction at equal prices. Figure 5 shows
the point of tangency between the indifference curve and the budget line.

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 ​Notice that we started at point A. Because the budget line shifted to the right, the
new optimum combination is now point B, increasing consumption for both good x and y,all
other things remaining constant.

Businesses and industries contribute to the standard of living and employment of household.
This is achieved each time the firm contributes to the output of the whole economy as seen in
Figure 1.
Like households, firms also have several roles, the households’s source of payments or
income, as indicated by the arrow from the firms to the increases the standard of living, and this can
only be done if members of households are employed and are receviing income.
Standard of living improves as one’s income and productivity increases, and their
consumption patterns change. The quality and quantity of consumption are determined by the
delivery of goods and services by firms. The said quantity and quality also affect the quality of life
that one experiences.

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 The next set of roles of firms are the same as those households, because in the next set,
households and firms are seen as one entity. For example, households contribute to incease in
savings, This is also true for firms because firms also have the ability to save, and these savings go
to banks, which then return the savings to the circular flow as investments.
Firms also contibute to the national economy by paying taxes, and these taxes are used for
government spending. Lastly, firms contribute to the establishment of trade relationships by
importing goods and services.

Direction: Discuss and apply.

1. Give the advantage and disadvantage of importing goods?
Advantage of importing goods- if the goods that were produced by other country is much
cheaper than those produced locally, then importation is beneficial. It could create
stronger ties and good rating relations with other countries.
Disadvantage of importing goods-the goods that are locally produced are not patronized
thus the business industry offering same product are dying and our economy gets
compromised.
Answer items 2 and 3. Enjoy!
2. What is the relationship between productivity and standard of living?

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 ___________________________________________________________________
___________________________________________________________________
____________________________________________________.
3. What happens to the consumption pattern of an individual after experiencing an
income effect?
___________________________________________________________________
___________________________________________________________________
____________________________________________________

I. True or False: Answer the following statements. Write T if the statement is true
and F if the statement is false.
________1. If the income increases, consumption also increases, all other things remain
constant.

________2. If the Standard of living improves, productivity and income also increase.

________3. The substitution effect is where one good experiences an increase in price, the
consumer is now faced with pivotal movement of the budegt line that increases
consumption.

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________4. Budget line shows all possible combination of x and y that give the same level
of satisfatcion.

_______5. In utility approach, the greatest marginal utility is achieved on the first unit of the
said good/service.

II. Make a list of products you use at home. List down what you like and dislike
about these products in the table below. Write a short report of the features and
characteristics that you would want to see in the future in your favorite products.

Products Likes Dislikes Innovation

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 SUPPLIERS AND INVESTORS
Aside from consumers, those interested in starting a business should also consider
where they will get their products or raw materials, as well as where or from whom they will
get the funds to start the business. Suppliers and investors play a big role not only in
business, but in the economy as well.

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The Role of Suppliers in the Production and the Economy
Who can be considered as supplier?
Let me give you an example.

When you buy bread from a bakery, the baker cannot make bread without flour,
yeast, sugar, salt, and margarine which come from the supplier. Goods and services
undergo two stages before they become the final goods and services.

From raw material goods (​flour, yeast, sugar, and margarine)​ which is the
unprocessed goods to the intermediate goods - the semi processed (​kneading and baking of
​ nd the final goods - the processed (​pandesal) and transformed goods ready for
pandesal) a

use and consumption.

Take note that only the final goods are included in the computation of Gross
Domestic Product which is indeed the summation of all goods and services traded and
consumed in a particular year.

Take a Look at the Illustration below!

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 Figure 8. Raw Material Goods, Intermediate Goods, and Final Goods
If your business offers services, it still follows the same format as discussed earlier.
An example is when you want to become an exclusive distributors of a product or a service,

or the sole local entity representing the main supplier of a service or a good.
An exclusive distributor is also a supplier who undergoes a selection process by the
main supplier or source. His or her main objective is to represent the main supplier by
reselling its products at a profit. Some off-shore franchises require strict financial capabilities
of local firms to ensure they sustain the company’s reputation. These companies who patent
the brand name are known as ​“raw material goods/services’; the local franchise who
avails of the same product or service becomes the exclusive distributor, or the “​intermediate
goods/services” or the outlet of the primary source. Finally, the local franchise can end up
as the seller of the service/good, or it may sell on a local basis the same franchise under the
local name or identity. In the Philippines, for example, the franchise local partner of
Starbucks is Rustan Coffee Corporation.

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 Franchises have tremendous impact on the growth and expansion of businesses
and industries because their brand name already speak for themselves, and they enjoy
significant brand recall among consumers, even when their goods/services are encountered
abroad. There is really no need to market them because most of these businessesses are
household names like Apple, Ford, Toyota, Honda, Toshiba and for food franchise are the
Jollibee and McDonald.

HOW BUSINESSES BENEFIT FROM SUPPLIERS

AND INVESTORS
Investors are entities that act as financial sources of businesses with the intention of

gaining profits. They lend money to business owners and expect these owners to return the
money with interest within a particular period.

Banks or similar financial institutions act like agents of said transactions. A private
entity saves or invests money in a bank, receiving interest from its venture. The bank in turn
uses this money as ready capital for businesses and returns the money to circulate in the
economy, to be used in different transactions, also getting financial gains.

This condition is best explained in Figure 9. Financial resouces come from both
households and firms, and these entities place their savings in banks. Banks act as
intermediaties and reintroduce savings to the economy as investments. Savings is the
outflow of households and inflow from banks. A person may borrow from the same bank and

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use it as capital. When savings are used to put up additional capital stock, it is known as an
investment.

Figure 9 shows that investment is introduced to the economy to sustain growth for
both households and firms, which means that in order for the economy to grow, there should
be an outflow of savings from the basic circular flow model and these savings will go back as
investments. The circular flow of investments being used to fuel the growth of both
households and firms shows that the economy is improving in terms of output.

Investors maybe either private individuals or business entities. Businesses benefit from
these investors because they may use their money as “add-up-capital” or as
“start-up-capital.” Other investments which do not come from savings include foreign
portfolio investments-where foreign entities invest in local companies-and foreign direct
investments-where foreign business operate in local or domestic markets.

Example: A foreign car company opening an assembly plant in the Philippines, which results
in increase in employment, output, and Gross Domestic Product.

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 Total foreign investments (FI) approved in the first quarter of 2020 reached Php 29.4
billion, 36.2 percent lower compared with Php 46.0 billion in the same period in 2019. This
investment pledges came from the six investment promotion agencies (IPAs), namely: Board
of Investments (BOI), Clark Development Corporation (CDC), Philippine Economic Zone
Authority (PEZA), Subic Bay Metropolitan Authority (SBMA), Authority of the Freeport Area
of Bataan (AFAB), and Cagayan Economic Zone Authority (CEZA). No investment approvals
were reported from BOI-Bangsamoro Autonomous Region in Muslim Mindanao
(BOI-BARMM) for the reference quarter.

The FI commitments for the first quarter of 2020 were mainly driven by investments
from the United Kingdom (UK) which accounted for 20.9 percent, followed by the United
States of America (USA) and China (PROC). The UK committed Php 6.1 billion. Meanwhile,
USA and China (PROC) pledged Php 5.7 billion and Php 4.9 billion or 19.6 percent and 16.7

percent of the total approved FI, respectively.

Approved investments of foreign and Filipino nationals in the first quarter of 2020
were expected to generate 34,814 jobs, lower by 17.6 percent compared with the previous
year’s projected employment of 42,245. Out of these anticipated jobs, 89.0 percent would be
absorbed by projects with foreign interest.

HOW BUSINESS INFLUENCE SUPPLIERS AND INVESTORS

As business benefits from suppliers by either becoming an exclusive distributor, a franchise
holder, or a producer, the inverse scenario also happens as business influences suppliers.

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 As a producer, a franchise holder, and an exclusive distributor, a firm can manipulate its
suppliers because the supplier’s profit is dependent on the firm’s output. If a firm is too small, then it
would also mean that the supplier’s profit is limited. Furthermore, the investor’s venture is also
limited in terms of interest earnings.

To illustrate, if ABC’s capital is 1 million with loan of 200,000 at an interest of 10% per annum,
then an investor’s rate of return is approximately 10 years. That is quite small for an investor with a
capital of let us say Php3 million. This is also true for the supplier. If the supplier’s machine costs
500,000 and the business only needs a low-end machine at 200,000, then the supplier’s profit would
be small also.

Let’s take, for example, the case of a popular mall chain with multiple branches nationwide.
One can only imagine how busy the chain’s shoe suppliers are because of the volume of sale of
each
branch.
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investment stocks of that particular mall chain are also very much desired by investors because it is
a prime,” first liner.” Stock, considered a very good investment. This popular mall chain can exert
significant influence over both its investors and suppliers.

Answer the following:

1. How do suppliers and investors differ from each other?

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A supplier is a person or business that provides a product or service to another entity while
investor i​ s any person or other entity (such as a firm or mutual fund) who commits capital
with the expectation of receiving financial returns.​

2. How can a foreign company penetrate the Philippine market? Discuss.

_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
___________________________________________
3. How can a bank facilitate someone with start-up capital? What are the requirements?
_________________________________________________________________________
_________________________________________________________________________

_________________________________________________________________________
_________________________________________________________________________
___________________________________________

Answer the following questions. Choose from the given words above.

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____________1. The goods that are ready for used and consumption.
____________2. The goods that are semi processed.
____________3. The one that represents the main supplier.
____________4. The unprocessed goods.
____________5. The sources of raw materials.

I.
1. What is the role of suppliers and investors in the economy?
___________________________________________________________________
___________________________________________________________________
__________________________________________________.
2. What are the advantages and disadvantages of putting up a franchise business?
___________________________________________________________________

___________________________________________________________________
___________________________________________________.

Suppliers are sources of raw material used in producing goods/ services.

Good and services undergo two stages before they become “final” goods and
services.
Raw material are unprocessed goods used to produce other goods.

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Intermediate goods are semi processed goods used to produce other goods.

Final goods are processed and transformed goods ready for use and consumption.
These goods are included in the computation of the country’s Gross Domestic
Product.
Exclusive distributor is a sole local entity representing the main supplier of a service
or a good. They are the suppliers who undergo a selection process by the main
supplier or source.
Investors are entities that act as financial sources of businesses with the intention of
gaining profits.
Private entity saves or invests money in a bank, and earns interests from its

ventures.
Financial resource come from both households and firms, and these entities savings
go to banks.
Bank acts as intermediaries and reintroduce the savings to the economy of
investments.
Savings are the excess of your income after you purchase goods and services. This
is outflow for households and inflow for banks.

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Multiple Choice: Choice the correct answer of the following questions.

1. This participants in the economy are the ones who determine what kind of products and
services are to be produced.
a. Producer c. Investor
b. Consumer d. Supplier
2. Because of the consumption of these participants, it tends to create additional jobs such
as Business Process Outsourcing which do things for other companies.
a. Producer c. Investor
b. Consumer d. Supplier
3. This brings the economic resources such as land, labor, capital and entrepreneurship to
firms, and these resources are used to make goods or services.
a. Household c. Firms
b. Consumer d. Investors

4. This is the source of natural resources used in production.

a. Capital c. Labor
b. Land d. Entrepreneurship
5. This is the stage wherein the arrow is pointing to bank which indicates the savings, and
these are sources of investments.
a. First stage c. Third Stage
b. Second Stage d. Fourth Stage
6. This shows the possible combination of x and y goods that your budget can afford to
purchase.
a. Indifference curve c. Optimum Combination
b. Budget line d. Income Effect
7. This is the shift of the budget line to the right that indicates an increase of your purchasing
power making your optimum combination more upwards.
a. Substitution effect b. Budget line effect

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 c. Income effect d. Complimentary effect
8. This word is synonymous to satisfaction.
a. Marginal Utility c. Utility
b. Total Utility d. Substitute goods.
9. This is the level of wealth, comfort and material goods to an individual and community.
a. Standard of living c. Firm
b. Earnings d. Households
10. This is the company that patents the brand name.
a. Intermediate goods/service c. Final goods/service
b. Raw material goods/service d. Exclusive distributor

Answer the following by making your own journal.

1. What is the role of the consumers and households in the industry?
___________________________________________________________________
___________________________________________________________________
___________________________________________________.
2. What is the role of the suppliers and investors in the business/ industry?
___________________________________________________________________
___________________________________________________________________
___________________________________________________.
3. What it the utility approach?

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 ___________________________________________________________________
___________________________________________________________________
__________________________________________________.
4. What is the budget line, indifference curve and the optimum combination?
___________________________________________________________________
___________________________________________________________________
___________________________________________________.
5. What is the benefit of being an exclusive distributor, a franchise holder or a
producer?
___________________________________________________________________
___________________________________________________________________
____________________________________________________

KEY TO CORRECTION
.​LETS DO IT#1 ​ ​(Possible answer)
(2 & 3) In the late 1980s, owning a pager was a fad. Pagers were used by people to send
messages to each other. One contacts another by calling an operator using a phone ang
leaving a message. However, users found this inconvenient because they could not send
messages directly to each other’s pagers. This reaches the innovators of text messaging
and a new device came out which allowed users to send messages and call each other
directly. Later on, innovators incorporated the function of a laptop into the smartphone. Now
users can also access the internet and do other things on their phones.
LET’S DO IT #2 ​(Possible answers)

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 1. ”​ Give the advantage and disadvantage of importing goods?
Advantage of importing goods - if the goods that are produced by the other country are
much cheaper than the goods produced locally, then importation is beneficial.It could
create stronger ties and good rating relations with other countries.
Disadvantage of importing goods - if the goods that are locally produced are not
patronized, the business industry offering same product will die which in turn could
compromise the economy.
2. What is the relationship between productivity and standard of living?

They are directly proportional because the standard of living improves as income and
productivity increase.

3. What happens to the consumption pattern of an individual after experiencing an

income effect?

If the income increases the consumption pattern also increases.

You can do it#1: I.

1. T 2. T 3. F 4. F 5. T
You can do it #1: II ​(Possible answers)

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Make a list of products you use at home. List down what you like and dislike about
these products in the table below. Write a short report of the features and
characteristics that you would want to see in the future in your favorite products.

Products Likes Dislikes Innovation

Examples:

wifi connection can access the poor internet excellent and

net connection reliable wifi
connection even
during typhoons

TV limited features TV with all the

can watch especially on features of a
different TV connectivity to the high-end
shows internet cellphone.

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Let’s Do it #3 ​(Possible answers)
1. How do suppliers and investors differ from each other?

A supplier is a person or business that provides a product or service to another entity

while investor ​is any person or other entity (such as a firm or mutual fund) who
commits capital with the expectation of receiving financial returns.​

2. How can a foreign company penetrate the Philippine market? Discuss. (​Answers
may vary but should include the legal requirements concerning foreign companies.)

3. How can a bank facilitate someone with start-up capital? What are the
requirements?

A bank will check if the borrower has the capacity to pay off for their loan, usually the
banks required a collateral that if in case the borrower cannot pay the dues, there is
a security on the part of the bank such as assets that can compensate for the
borrowed money. Usually if the borrowers are newbies in the industry, the bank
investigates if the information given by the borrowers are legitimate.

You Can Do it #2

1. The goods that are ready for use and consumption. ​(final goods)
2. The goods that are semi processed. ​(intermediate goods)

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 3. The one that represents the main supplier. (​exclusive distributor)
4. The unprocessed goods. ​(raw materials)
5. The sources of raw materials.​ (supplier)

II. (Possible answers)

1. What is the role of suppliers and investors in the economy?

Suppliers are the source of raw materials used in producing goods or services.
Investors are the source of start-up and add-up capital in a business venture.
2. What is the advantage and disadvantage of putting up a franchise business?
Advantage: No need for you to introduce the product since it is known to the
market. Can easily sell the product because of their signature.
Disadvantage: Needs to pay for the franchise fee which is costly and if the

franchise will not prosper you are still confined with the contract.

Check Your Understanding:

1. b 6. b
2. b 7. c
3. a 8. c
4. b 9. a
5. b 10. b

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 REFERENCES
Manapat, C.L. 2018. ​Applied Economics for Senior High School. Quezon City: C&E
Publishing Incorporated

Websites:
https://www.oberlo.com/ecommerce-wiki/supplier

https://www.investopedia.com

https://consulus.com/exploring-the-philippine-market/

https://marketbusinessnews.com/
http://www.psa.gov.ph

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