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ECONOMICS AND ENTREPRENEURSHIP At the end if this unit, you should be able to: - define economics and entrepreneurship;

- differentiate economic growth from economic development and explain their relationship; - enumerate and explain the measures of economic performance and the policies affecting it; - discuss the economic problems of the Philippines today; and - give an overview of the future of the Philippine economy.

THE ECONOMY IN GENERAL What is economics? Economists all over the world have come up with various definitions. Alfred Marshalls principles of economics" defines economics as "a study of mankind in the ordinary business of life; it examines that part of an individual and his social action which is mostly close connected with the attainment and with the use of the material requisites of wealth; and on the other, and more important side, a part of the study of man." Economics is generally defined as the study of the use of scarce resources to produce goods and services which are then distributed among different people. It may also refer to the condition of a country as regards material prosperity. Here are some points of reference given by economists to draw your attention to a wide range of theories and concepts which the field of economics covers. Economics asks what, how, and for whom. o What good are produced? How are these goods produced? For whom are these goods produced? Economics is the study of commerce among nations. o It explains why some nations import whiles other export. it studies trade relations between countries. Economics analyzes movements in the overall economy. o It analyzes trends in prices, output, unemployment, and foreign trade. Once such trends are known, economists formulated policies and standards upon which governments base their moves to improve economy. Economics is the study of money, banking, capital, and wealth. o In a society where these are important, there is a need to understand the relativity between them.

COMPONENTS OF AN ECONOMY What is the economy made of? The preceding discussion cites the functions of economics in relation to the lives of people. Economics is a function of several areas. Thus, we can say that the economy is made up of several components or sectors. These include business enterprises, households, and government. Households refer to the families that make up a community. They participate in the movement of the economy though their ability to earn and their inclination to spend their earnings. They relate to other sectors in society in their capacity to give and receive resources. They provide resources through their expertise and skills. In return for these resources, they receive payments. However, they have to return these resources once they start to spend. Business enterprises are represented by the companies or firms in the community. They supply products and services to satisfy consumers. They also provide jobs and income to people. Business enterprises are owned by individuals. In some cases, firms are opened by families or a household. The very basic distinction is that the firm is a formal structure which provides products and services. Bear in mind that a business is separate and distinct from its owner/s. The government is a system which regulates the affairs of people. How is regulation done? The government is made up of institutions and agencies responsible for making and administering laws and public policies. These agencies are responsible for certain affairs. The government's capability to enforce laws and maintain peace and order has a tremendous effect on the growth of the economy. In most cases, the success or failure of businesses to earn profits and the success or failure of household to save from their earning are dependent on how well the government is being run.

MACROECONOMICS VS. MICROECONOMICS What do these words suggest? Macro means big, general or broad in scope. Micro is the reverse. It means small, specific or narrow. Thus macroeconomics looks at the economy as a whole or from a general perspective, while microeconomics is the economy in detail. More specifically, macroeconomics refers to the behavior of the economy as whole. It is concerned primarily with four areas: 1. Output 2. Employment 3. Price stability 4. International trade It can be analyzed by using macroeconomics variables like gross national product, unemployment rate, inflation, and net export. In short, macroeconomics is the economy as viewed from top. Microeconomics, on the other hand, is the economics as seen through the various components that make up the entire economy. It analyzes the behavior of an individual components of the economy, like industries, firms, and households. It is particularly concerned about how individual prices are determined. It deals the supply, demand and products market, consumer behavior, production, and business organization. Furthermore, it is concerned with costs, revenues affecting firms and competition in the market.

THE THEORY OF SUPPLY AND DEMAND Supply - is defined as the amount of a commodity that is available to satisfy the consumer. Demand - is the desire of the customer to buy a commodity. Supply and demand go hand in hand. One needs the other. Why? Supply provides the satisfaction of a customer. Lets take for example a seven year old child. What does the child need? Assuming that he/she needs three look for a supply of milk by buying from the grocery store? What would make the mother buy a quantity just enough for two glasses of milk instead of three? The answer to this can be extracted by knowing the elements that affect the supply of a commodity Elements that affect the supply of a commodity: 1. Price 2. Technology 3. Cost of production 4. Market organization 5. Prices of related goods 6. Special influences PRICE. There is the amount a customer is willing to pay for the commodity. If prices go up, the quantity demanded will be less. If prices go down, the quantity demanded rises. The relationship between the prices go the goods and the quantity supplied is shown by the supply schedule or the supply curve.

TECHNOLOGY. Computerized manufacturing decreases production costs and increases the supply of a product. For example, handmade goods are more expensive because they are longer to produce. PRODUCTION COSTS. Lower production costs mean bigger production. For example, P 10,000 may be used to buy 10 meters of clothes at P 1,000 per meter. A higher cost per meter, let's say, P 1,500, would make the P10,000 by less than 10 meters of cloth. Thu, less finished goods can be produced. MARKET ORGANIZATION. When important is not restricted, more will supplies will flow into the market. The freedom to compete in a given market will make the supplies readily available. PRICES OF RELATED GOODS. When price of one or more related products, for example, a cell card, increases, the supply for cellphones decreases. SPECIAL INFLUENCES. An expectation about future prices often has an important impact on supply decisions. For example, if there is a pending price increase in gasoline, dealers start to hoard the supply, thus increasing the price. Demand Refers to how much the buyers are willing to pay for a product or service. For instance, you want to buy a cellphones. There are two merchants of cellphones of the same brand, quantity, and features. One price is at P 6000/ unit and the other P8000/unit. 'Which would you buy? If you're smart enough you'll buy the unit which cost only P6000. Demand is affected by several other factors namely: 1. Income of the customer 2. Population 3. Prices of related goods 4. Tastes or standards 5. Special influences AVERAGE INCOME OF THE CUSTOMER. If an income of a person increases, the more likely he can buy any anything for himself and probably for his family. POPULATION. The more people there are in the community. The bigger the consumption is. Let take the example in the city. Why is that there are more business enterprises in the city than in the rural areas? Because there is high demand due to a big number of population. The coming of the people in the cities is called ameglioration. When people amegliorate, demand increases. PRICE OF RELATED GOODS. In the example of cellphones demand lower rates per minute offered by cellphone companies will encourage to buy cell phones. TASTES/STANDARDS. Most people would buy a leading brand that has been tested through time than an unknown brand of the same quality. At the same time, the preference of the buyer to certain taste will make the demand increase. SPECIAL INFLUENCES. These are the factors that might affect the quantity demanded. These could be the caused by expectation in the scarcity of supply, increases in prices, changes in style, among others. Let take the Y2K fear as example. Nearing the end 1999 was a major preparation not only businesses but people as well. The people decided to stock up on their goods just in case industries cannot manufacture because of brownouts.

Lesson 3: THE POLICIES AFFECTING THE ECONOMY There are three major policy instrument used by government, namely: Fiscal, International Economic, and Income Policies. The major economic problems faced by most countries today include unemployment, inflation, rising import, and declining GNP. To manage these problem, the government must use certain instruments. There is corresponding policy instrument that provides an answer to each of these problems. Fiscal policy Fiscal policy refers to the use of taxes for government expenditures government expenditures include spending on goods and services like purchasing of tanks and ammunition, construction of roads and dam, and allocation of the salaries of government officials, among other things. The expenses incurred by the government affect its overall spending, as well as the level of GNP. Taxation, which also forms part of fiscal policy, affect the overall economy in several way. For one, taxes reduce peoples income. This means that the amount of money on goods and services is reduced. This lowers demand and eventually decreases the GNP. It affects the market prices. Supplier usually pass on to consumer a certain portion of the taxes they pay. The lowering of taxes is a business incentives through which the government encourages economic activity. Public work is a fiscal policy measure that reduce unemployment. Induced government spending called pump priming was one of the fiscal policies resorted to the former President Estrada. Monetary Policy Monetary policy refers to government management of the money, credit, and banking system of a country. Money is defined as a common account as a means of payments. CB controls the money available to the economy. Money supply affects interest rates, stocks prices and exchange rates. Consequently, controlling the money supply in the economy leads to higher interest rates... Likewise, reduced investment cause a decline in GNP AND LOWER INFLATION. In the event of a business turndown, the central bank can increase the money supply and lower interest rates to stir up economic activity. Depending on the analysis of financial expert, monetary policies like interest rates can be changed quickly. This type of policy does not need congressional to be changed. International Economic Policy International economic policy has two categories. The firs is trade policies, consisting tariffs, quotas and other devices that restrict or encourages import and exports. The second is exchanged market management. A country's international trade influenced by the exchanged rate, which is the price of its own currency versus of the other nations. Income policy Used by the government in its attempts to moderate inflation by legislated wages or price control, income policy refers to measure related to the control of wages and prices, issues like increase in minimum wages, regulated prices of rice, sugar and other basic food items, deregulation in the oil industries, are some of the related to income policy.

ECONOMIC PROBLEMS FACING THE PHILIPPINES TODAY Today Economics Problems Every country has its own problems. India has a big problem of over population. On the other hand, Canada, Belgium, and other countries have a problem of under population or an aging population. In the US and some other countries in Europe, employment is not problem but in the Philippines and other undeveloped nations is a big problem, so, what are the prevailing economic problems in the Philippines among these are: 1. Unemployment 2. Housing 3. Health and sanitation 4. Drugs 5. Prostitution 6. Peace and order 7. Poverty UNEMPLOYMENT. This remains as one of the countrys major problems. The academe and the population have been producing people who have no guaranteed jobs. Job positions are scarce and are very competitive because of a large number of applicants. Because of competition, a college diploma is not enough. The scarcity of source of employment gives rise to a number of Filipino seeking employment outside the country. Unemployment gives rise not only to problems in housing and health but also to social maladies such as drug dealing, robbery, and prostitution HOUSING. A big number of Filipinos still don't own homes. On the average, about 1/3 of their salary goes to house rent. This situation is much worse in the lower class with overall population of 95 million, 25 million in metropolis, housing could readily become a very serious problem. HEALTH AND SANITATION. These are two of the ill effects of poverty. Since people have less money to buy preventive medicine or nutritious food problem as far as the garbage is concerned. ILLEGAL DRUGS. These proliferate not only in the metropolis but also in the province some causes illegal drugs are the rise in prostitution, the losing situation in the families due to working lifestyles, social pressures, and others. PROSTITUTION. This problem has been growing not among women but among men. What has cause the proliferation of prostitutes? People engaging in prostitution consider it as a source of livelihood since the economy cannot provide them with income they need. Though it may be regarded as a solution to the problem of unemployment, it does not guarantee better living conditions. Once positive solution is to engage in entrepreneurial activity. PEACE AND ORDER. This is social issue that possess risk to lives and properties. If there is no peace and order, crimes like murder, kidnapping, robbery, and assaults proliferate, putting lives and property at risk. Political instability creates uncertainty, a conditions perceived by investor as a risky situation. Thus, in times of poor peace and order conditions, foreign investor refuse to invest, leading to a slowdown in economic growth. Entrepreneurs also fear their lives and investment resulting to conservative investments.

POVERTY. When there is a high rate of employment, poor peace and order, and other unfavorable conditions persists and proliferate, then we can say that there is poverty. Why? These are indications that people dont earn enough for their needs. ECONOMIC PROBLEMS What caused these problems? At this point, we could be exciting to discuss the reasons why economic problems come about. These self-inflicted or are they brought by someone or somebody. Now, lets ask ourselves this question, What has caused these problems?, Why are we not as progressive as the American or the Japanese? The factors that can possibly explain these are the following; Attitudes, Practices, Poor Governance, and A lack of United Vision. ATTITUDES. They say that Filipinos are warm people. Yes, we are. It is because of this attitude that easily get befriended. More so we respect our friends so much that sometimes, we are unaware that we can already being robbed. Our colonizers exploited our natural resources for their own benefit. Second, our Spanish colonizers influenced us with their maana habit and ningas cogon, traits which the majority find hard to shake off. One of the negative attitudes of Filipinos is indifference to the common good. A long as they are earning well, they dont care what will happen to other people. PRACTICES. The Filipinos have several practices that are embedded in our culture. There is massive graft and corruption in the government and From ones disposition to disregard the highest standards of morality. Smuggling, capital flight, illegal gambling, drug trafficking, and tax evasion are some factors that hinder economic growth. Gambling in any form is a practice that has somehow a way of life for many marginalized Filipinos. POOR GOVERNANCE SYSTEM. As we have mentioned in the preceding discussion, the government is one of the sectors of an economy. The Philippine political system, unlike that of the US, have provided a culture of a corruption and fraud. Some expert say that whoever is in position does not chance the political scenario in the country, a pattern that has been repeatedly followed over the years. LACK OF UNITED DRIVE. Our countrys population is divided into social strata; the rich, the middle class, and the poor. It has observed that the fight for changes is a fight of one class, unless the others are also affected. The Filipinos lack the united spirit to stand one vision. HOW CAN THESE PROBLEMS BE SOLVED? The Philippines will now have to work much harder to achieve the growth that came so easily in the past. That means much better education, smarter use of the resources, and more accountable government. Alone with this, you should expect the new innovations have their own advantages and disadvantages. Lets take for example the rise in Information Technology, the use of computers provides case in terms of work functions. However, several studies have also proven that the human factor to relate has deteriorated fast.

Because people are now engrossed on their computers, they lack time to discuss certain issues in person or fail to listen what other people need to say. Thus, it is important that for whatever new things that we do, we have to review them properly and come up with the best decision for the greater good.

January 8, 2013 ECONOMIC GROWTH What is Economic Growth? Economic Growth represents the expansion of a countries potential. Simply stated, these is economic growth in real wages and improvement in living standards. When more people can afford to have their own houses and less people need to work, then we can say there is economic growth. How is economic growth measured? Economic growth is the product of the process of economic development. Economic growth is measured by a countrys Gross National Product (GNP). GNP is a universally recognized measure of the value of the goods and services produced in a country. This is composed of four components namely: 1. Consumption 2. Investment 3. Government Purchase 4. Export Less Import GNP = C + I + G + X M CONSUMPTION. Value of the purchases made by different households. This constitutes the biggest component of GNP. The higher the consumption, the higher the GNP will be. A higher demand or consumption indicates that more people can afford to buy the things they need and want. INVESTMENT. An economic activity that forgoes consumption today with the hope of increasing output in the future. This includes tangible capital like building, equipment and inventories, and intangible investment like education, research, and development etc. GOVERNMENT PURCHASE. The total government spending on goods and services. Ordinarily, we look at spending as a negative doing. NET EXPORT. Defined as the export of goods and services minus the import thereof.

ECONOMIC GROWTH VS. ECONIMOC DEVELOPMENT Economic growth is the product of economic development. Economic development is the result of the changes in the economic factors and measure such as culture, values, religion, and education. The ultimate grow economically, a country has to undergo the process of economic development. For example, values and culture may affect the way people spend. ECONOMIC GROWTH

Economic growth is positive result of economic development. When people make changes in their beliefs and practices and start contributing to the consumption of goods. GNP increases, Economic growth is attained. Encouraging more economic activity is part of economic development process. Providing support to small and medium enterprises is the government way of promoting economic development. SOURCES OF ECONOMIC GROWTH Many studies have attempted to identify the sources of economic growth. So far, no single formula is universally accepted. All countries would like to achieve higher productivity growth. This can be achieve through the following: 1. Technological advancement 2. Improve quality of education 3. Continuous reallocation of resources for low productivity and higher productivity sectors 4. Political stability 5. Business incentives

TECHNOLOGICAL ADVANCEMENT. It was predicted that technology with the world in education, in business, in the government, and in households. Technological advancement indicates a high urbanized organization consequently, the society. Technology connotes globalization and growth. To be globally competitive, a country should keep up with new trends in information technology, e-mail, and e-commerce have benefited the corporate world, labor incentive industries, and most homes. The use of technology means faster and larger production. Computerized machine which speed up facilitate work, production, and manufacturing are needed to be globally competitive. IMPROVED QUALITY OF EDUCATION. Aside from food, clothing and shelter, education is another basic necessity. Parents send their children to school for them to attain prosperity in the future once they got job. A high standard of education means that government is able to put in adequate resources to provide the necessary technology and instructional materials. CONTINUES REALLOCATION OF RESOURCES. Resources may deplete in the long run if the government is not able to replace what has been lost. Since these resources are scarce or limited, the government must have the ability to allocate its distribution to the community members. A balance allocation of resources is attained if people. Whether rich or poor, are able to enjoy the use of such resources. POLITICAL STABILITY. It has been pointed out that the world is one sector of economy. A solid and good governance creates good policy measures that can help improve an economy. A government with too much political unrest creates fear on investor. BUSINESS INCENTIVES. One sector of the economy is the business component. As we know, businesses creates employment and bring in money to the government in the form of taxes that they pay and providing jobs to workers. Creating more business incentives in consonance with attracting investor.

QUESTIONS: 1. What is GNP? 2. What are some of the factors that bring about the economic growth? 3. Write an essay about how the internet can be source of economic growth.

IS THIS FUTURE ECONOMY FEASIBLE? Although its not as simple as it looks. Anything is possible of you do your share. Doing your share means helping the country in your own little way. For example, when you have reached voting age, you are obliged to choose morally upright candidates. Knowing what causes the problems to hamper economic growth, you should be economically able to device some ways positively contribute to economic growth. One of these ways is to put up your own business in the future. By doing this, you can help the country solves some of its pressing problems especially on employment. WHAT FACTORS INFLUENCE THE FUTURE OF THE ECONOMY? There are two elements that determine our economys future; the government and the people. THE GOVERNMENT. In the third world country like the Philippine, the government plays a major role in the growth of entrepreneurship and foreign investments in the country. The type of government leaders or the governments impartiality also affects the future of the economy. THE PEOPLE. Citizens are also mainly responsible for the future of the economy. Filipinos with capital should invest in the country to boost its economy. As more citizen are encouraged to be entrepreneurs, it is hoped that economic problem will be a thing in the past. Though the idea of self-generation and reliance, economic growth can be attained. WHAT TYPE OF ECONOMY WOULD WE LIKE TO SEE? Ideally, we would want equal distribution of resources an economy where there is equality, where the rich are not favored over the poor. We would like to live in a country where people have decent jobs and can answer not only to their families basic needs but also provide the finer things in life, a country where businesses are mostly owned by Filipinos. We would like an economy no longer classified as belonging to the Third World. QESTIONS: 1. What are the economic problems faced by the country today? 2. How can the government and the citizens held make the Philippine economy face a better future?

ENTREPRENEURSHIP AS A FACTOR IN ECONOMIC GROWTH What is entrepreneurship? Entrepreneurship comes from the Latin word entre (meaning enter), pre (before), neur (nerve center). Entrepreneurship is not limited to starting a new business. It also includes changing or developing an existing business. WHAT ROLE DOES ENTREPRENEURSHIP PLAY IN ECONOMIC GROWTH?

Entrepreneurs play a very important role in the economy. Why? Remember that the GNP of a country is an interplay of several factors. Some of these factors are consumption and exports. Entrepreneurs supply the economy with goods and services that answers the customers needs and wants. They introduce new ideas and innovations that make our lives easier and raise the standards of living. By doing so, consumption and export are encouraged. Specifically, entrepreneurs contribute to the following: EMPLOYMENT. Business needs employees. As each new business is formed, several people are removed from the list of unemployed citizen. This increases the level of spending in our economy, eventually rising our GNP. INDUSTRIAL LINKAGES. Small entrepreneurs link up with big companies share their technological know-how with or provide financing to smaller enterprises. This will ultimately lead to more quality goods produced more efficiently. FOREIGN EXCHANGE. Business engaged in export consistently bring in substantial dollar earnings to the economy. NEW MARKETS, PRODUCTS TECHNOLOGIES. The innate creatively of entrepreneurs inspires them to create new markets. They discover untapped markets or stimulate demand from consumers by introducing new products. Introducing new technologies has also raised consumers standard in the products the y use.

OPPORTUNITIES AVAILABLE TO WOULD-BE ENTREPRENEURS: An entrepreneur should be creative, patient, aggressive, systematic, and highly organized. If you try to look around and analyze your environment, you will see a lot of business opportunities where there are people whose needs have to be answered and who have the money to satisfy their several opportunities await entrepreneurs. Entrepreneurs are a resourceful and creative lot. One basic strategy is to start with yourself or your household. What do you need? How can these needs be satisfied? Next is to assess you on neighborhood. Put up a sari-sari store if you see no store around. You can also set up a small restaurant, a bakery, a beauty parlor, a boutique, a tailoring shop, a hardware store or a computer caf. The business you wish to start depends on the place, needs and wants of those around you, you start-up capital, and your interests. How you will find these things is the challenge to you as would.

ENTREPRENEURIAL ECONOMY The government should take the first hand in the development of an entrepreneurial economy. What is its role in promoting an entrepreneurial spirit? 1. It creates entrepreneurial awareness. Filipinos prefer to be employees rather than business owners. Many would not want to risk their life saving, for instance, to put up their own business for fear that they may not survive local or foreign competition. Thus, there is a need to eliminate this fear by orienting them with the advantages and benefits only an entrepreneur can get. The government has yet to intensify its efforts in promoting entrepreneurship by including this subject as part of high school curriculum that entrepreneurship can indeed improve the economy and the risks in business are worth taking. Short courses on business enterprises should be brought to the grassroots level where housewives can help augment their family income.

Fortunately, business management courses are offered to high school student like you. That will enable you to discover what kind of business you want to go into. QUESTIONS: 1. Explain the nature or entrepreneurship. 2. How can entrepreneurship help the country? Activity Pretend that you are a reporter. Interview an entrepreneur in your neighborhood about how he/she thinks he/she can help in the growth of the Philippine economy. Write an article about your interview and report it in class002E

10 FAMOUS SUCCESSFUL FILIPINO ENTREPRENEURS 1. SOCORRO C. RAMOS National Book Store Sales girl at 18 yrs. Old in Goodwill Bookstore 2. TOBY TAN CAKTIONG Jollibee Foods Corporation 3. LUCIO TAN Scrap business Scientist to Entrepreneur Owns Asia Brewery Tanduay, Fortune Tobacco, Philippine Airlines, Allied Bank 4. ATTY. FILIPE L. GOZON Chairman, President, and CEO of GMA Network Master Entrepreneur in 2004 5. HENRY SY ShoeMart Sell American Shoes 6. JAIME ZOBEL DE AYALA President and Chairman of Ayala Corporation Help poor people 7. ALFREDO YAO Zest-O Corporation Printing Press Business

8. MARIANO QUE Mercury Drugstore 9. CECILIO K.PEDRO Founded Lamoiyan Corporation Hapee and Kutitap Toothpaste 10. CORAZON D. ONG CDO Foodsphere, Incorporated Dietician by profession Make processed meat products

6 SECRETS OF FILIPINO ENTREPRENEURS 1. They all love what they are doing 2. They didnt need a qualified and formal education to become successful 3. They all failed 4. They worked hard 5. They all had dedication and persistence 6. It took time 10 MINDSET OF SUCCESSFUL ENTREPRENEURS 1. Reach out to customers first 2. Find a new market for an existing product 3. Use networking to build your business 4. Give without expecting a return 5. Keep control of your vision 6. Understand the power of brand 7. Focus your energy on whats good for your business 8. Always maintain quality control 9. Set your product apart 10. Take ownership

TYPES OF ENTERPRISES There are three types of enterprises according to asset size: small-scale, medium-scale, and the large-scale. SMALL-SCALE ENTERPRISES. Asset size of small-scale enterprises is worth from P1.5M to P15M. The number of employees may range from 10 to 99. A small-scale enterprises may start from a backyard business. MEDIUM-SCALE ENTERPRISES. Asset size of meduim-scale enterprise ranges from more than P15M to P60M. Employees may number from 100 to 199. A meduim-sclae business needs at least P15M capital.

LARGE-SCALE ENTERPRISES. Large-scale enterprises have assets above P60M. Its employee base is 200 or more.

SMALL AND MEDUIM-SCALE ENTERPRISES Small scale and medium-scale enterprises are further categorized into micro, cottage, and small and medium enterprises. Microbusiness may have employees ranging from one to four while cottage businesses employ five to nine employees. Base on Magna Carta of small businesses, the asset values of this sub category may vary. Microbusinesses assets with a value of P50,000 or less. On the other hand, cottage businesses have assets from more than P50,000 to P500,000. Small businesses have an asset base of more than P5M to P20M.

THE UNDERGROUND ECONOMY There no such thing as "managers" in small unregistered businesses. Collectively referred to as the "underground economy." These businesses include selling barbeque and bananaque in sidewalk stalls, balot vendors, those manning a palamigan and halo-halo stand in your neighborhood, and the supplier of homemade tapa and hotdogs. Generally, they cannot dominate business because of their limited resources although it forms a large part of the economy. Did you know that the underground economy contributes to about 30 percent to 50 percent of the GNP? However, there are a lot of cases when an underground economy cease to be such. No big capital is needed to set up a small business. One can be his own boss with a regular group of patronizers or customers although some flexibility in managing it is necessary. Decisions can be made at one's own pace, unlike in big business where stockholders are called to a meeting before any decision is made. The governments also gives incentives to properties of small business ranging from financial incentives to technical aid. Like in nay business venture, there are always risks involved. One of them is financial risk. A certain amount of money is needed to start up a business. The risk there is not knowing whether the business would be a success of not. But aspiring entrepreneurs are supposed to be the more optimistic and courageous type of people. If you think you belong to this group, then you have the makings of an entrepreneur.

QUESTIONS: 1. What are the types of business according to size. 2. What is the "underground economy" composed of? 3. What are the advantages of putting a small business?