La Consolacion College of Iriga

San Francisco, Iriga City – 4431

Tel. No.: 299-2340 Fax No. 299-70-77

Self-Learning Module
in
Applied Economics

Module 5: Contemporary Economic Issues facing the

Filipino Entreprenuers
Semester: First Semester, Academic Year 2021-2022
Course Code: AE BPS 5
No. of Units : 3
No. of Hours : 3 Hours/Week

Jeorgette N Maninang
Instructor
 Module 3: Demand, Supply and Equilibrium

Desired Learning Outcomes

At the end of this module, learners are expected to analyze the effects of contemporary
issues such as migration, fluctuations in the exchange rate, oil price increases,
unemployment, peace and order, etc. on the purchasing power of the people

Introduction:

Entrepreneurs are characterized as risk takers. There is no guarantee or assurance of

making profit or succeeding in the business venture. Our situation most especially today is a
great challenge to entrepreneurs as pandemic affect not only the healthcare sector but also
trading and economic system not only in the Philippines but across the world.

Learning Activity 1:

Identify the economic system described in each statement. Write your answer on the
space provided.

1. The most basic economic system. ____________________

2. Production is driven by supply and demand. ____________________
3. In this kind of set-up, some industries are controlled by the
government, while others are privately owned. ____________________
4. Government owns the means of production ____________________
5. This system is based on small communities, families or tribe. ____________________
6. Government decides the quantity of production. ____________________
7. Government is not involved in making economic decisions ____________________
8. Government influences supply and demand through
regulations and interventionist policies ____________________
9. This system relies on barter ____________________
10. A combination of capitalist and command economic
systems ____________________

Analysis:

Point at least a factor that affects a Filipino entrepreneur’s decision whether or not to
establish his/her business? Explain briefly.

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Lesson Proper:

The idea of entering in the world of business poses great risks. It takes strength and
courage for someone to get into business especially that we are in a situation where there is
limited movement hence, return on investment and revenue is uncertain. Our lesson then will
cover the contemporary issues faced by Filipino entrepreneurs.

INVESTMENT and INTEREST RATE

Investment is crucial in business. Entrepreneur makes a capital contribution to fund the

entity to enable business operation. Owner then expects return on investment and profit. When
an owner does not have sufficient resource to invest in the business, he/she may resort in
obtaining loan(s) to bank or creditors. This loan however incurs cost that an entity is obliged to
pay aside from the principal amount it owes to other party, and that is - interest.

A low interest rate on borrowings encourages an entrepreneur to borrow funds to be able

to start up his/her business while high interest rate prevents an individual to establish his/her own
business.

RENTALS

A business which does not have its own property, building or space turns to incur cost for
the usage or occupancy of space, building or property. This cost is Rent Expense. It is classified
to be part of general and administrative expense which means that payment is continuous even if
operations are not within normal.

Rental expense affects the results of business operations. It decreases its net income or
profit. This is the reason why it is an advantage when an entrepreneur owns the building or space
it utilizes in business. Further, the cost to pay for the rent is influenced by the size or location of
the property. The bigger the area, the higher the rental fee; In terms of location, the more that it is
situated in a commercial and urban area, the higher the cost for rent.

An advantage however noted during this time is that entrepreneurs no longer have to look
and rent for physical store in order to make sales. Business may be done in the comfort of their
homes. Thus, not charging the business with fees for rent.

MINIMUM WAGES

Minimum wages refer to the floor or lowest price that employer shall pay its worker for
the performance of his/her job or the rendering of his/her service.

Published in the Official Gazette of the Philippines, our government set minimum wages
considering the following factors:
1. Needs of workers and their families
Demand for living wage
Wage adjustment vis-à-vis Consumer Price Index (CPI)
Cost of living and changes therein
Needs of workers and their families
Improvements in standards of living

2. Capacity to pay
Fair return on capital invested and capacity to pay of employers
Productivity

3. Comparable wages and incomes

Prevailing wage levels

4. Requirements of economic and social development

Need to induce industries to invest in the countryside
Effects on employment generation and family income
Equitable distribution of income and wealth along the imperatives of economic social
development

Minimum wages set up by the government affect the entrepreneurs in the negative. This
discourages small businesses to hire workers as their income may not be able to cope for the
set minimum wage.
Entrepreneurs contend to pay their hires based on their output or productivity rather than
pay in a fixed amount set. This method will also motivate workers to work or produce in
larger quantity and quality to get through with competition.

TAXES
Taxes are mandatory contributions or fees collected by the government. They are
imposed to individuals and business organizations. They are considered to be the “lifeblood of
the government”- important as it sustain its need and the people.
Business tax imposed is based on its income or profit ; the greater the income, the higher
the tax to be paid. This discourages then entrepreneurs to invest or establish business, register
their entity to the bureau and worst declare their actual net profit or income. With this, the
revenue of the government also decreases. This means that budget or funds to finance public
needs are likewise affected. Infrastructure projects are held and other government projects and
assistance are suspended.

*****
Faith Integration:

Filipinos are resilient. With faith and confidence, we can survive the challenges and
issues that we face today and those that lies ahead.

Activity 2:

Make a research on the following:

1. Regular interest rate imposed by local financial institutions such as bank, cooperative on loans
or borrowings.
2. Find out the common cost to rent space, office or building in the City of Iriga or in your
locality.
3. Find out the minimum wage set in the Rinconada Area? (Iriga, Baao, Bula, Nabua, Buhi and
Bato)
4. Interview at least 3 business owners in the City and ask them how much they pay for the
renewal of their business permits? Comment.

Resource Material:
https://pdfcoffee.com/applied-economic-quarter-1-module-6-week6-1-pdf-free.html