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•relating to or concerned

with the interaction of social


and economic factors.
•socioeconomic change
•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.
•Understand the socioeconomic factors
affecting business will help you make better
decisions about the future and direction of
your business. To have an intimate
understanding, however, you will have to
understand both external and environmental
factors, as well as how their interplay affects
your business.
• This is a special term that refers to the process of
looking at the external socioeconomic issues in a
business. It is considered a part of general
business analysis, so it is useful to the executives
of a company. It can help them grow the
organization, increase the streams of revenue the
company receives and also get ahead of
competitors.
• A subset of environmental analysis is the PEST analysis,
or some of its variants, such as the PESTLE analysis. This
is a form of analysis that looks at four relevant factors
that affect a business environment, and these – Political,
Economic, Social and Technological factors – create the
acronym “PEST.” There are other variations, such as
PESTLE, which includes Legal and Environmental
factors. However, the four factors in PEST analysis are
the main economic factors that affect a business.
•Consumer Theory describes how
consumers make decisions on what to
buy.
•Consumption refers to the use of goods
and services to satisfy human wants
directly.
•A consumer aims to maximize the
satisfaction he/she derives from the use
of a good or a service. Utility is the term
used for satisfaction. Utility is something
intangible. As such, it is not easy to
measure.
•Quantifiable goods are subject to
measurement; they can be expressed
in numerical values. In order to make
it easy to understand the concept of
utility, we shall assume that it is
measurable in units, which we shall
call utils.
• A util is one unit of satisfaction. The utility
function shows the relationship between utility
and consumption. In equation form, it is: U f(C),
which simply stated is: utility is a function of
consumption. Also, to be more specific, utility for
the consumption of goods X and Y can be
expressed as: Important measures of utility are:
Total Utility and Marginal Utility.
•Total Utility refers to the combined
utility derived from consuming certain
units of a good.
•Marginal Utility refers to the additional
utility derived from consuming an
additional unit of the good.
•The Law Of Diminishing Marginal
Utility states that all else equal as
consumption increases the marginal utility
derived from each additional unit
declines. Marginal utility is derived as the
change in utility as an additional unit is
consumed.
QUANTITY OF TOTAL UTILITY MARGINAL UTILITY
CONSUMPTION
1 8 8
2 15 7
3 21 6
4 26 5
5 30 4
6 33 3
7 35 2
8 36 1
9 36 0
10 35 -1
• The consumer is the person who buys the product
business offers for sale. It is therefore imperative that
we get to please the consumer, so he/she will buy from
us instead of from our competitors and also that once he
buys from us he will be loyal to us and not buy from
other sellers of the same product. Knowing how
consumer satisfaction is maximized will help a business
in always keeping the consumer's welfare the topmost
priority.