CHAPTER 4.

SOCIO-
ECONOMIC IMPACT
ACTIVITY
UTILITY FUNCTION AND CONSUMER BEHAVIOR IN
BUSINESS
Consumption-refers to the use of goods and services
to satisfy human wants directly.
Consumer-the person who buys and consumes the
product business offers for sale.
Utility-is the term used for satisfaction derived from
consuming a good/service
Utils-one unit of satisfaction
 MEASURES OF UTILITY
1.Total Utility-refers to the combined utility derived from
consuming certain units of good.
2.Marginal Utility-refers to the additional utility
derived from consuming an additional unit
of the good

Production-refers to the use of economic resources

to create goods and services that will satisfy
human wants
Input – refers to the resources used to produce
goods and services
Output-refers to the product created as a result
of the combination of input in the process of
production.
Total Product-refers to the combined production
of several unit of a given input.
 Marginal Product-refers to the additional output
produced by an additional unit of the input
Average Product-refers to the average contribution
per unit of the input.
Law of Diminishing Returns-
Concerns When Putting up a Business:
1.Gain Profits 4.Environmental
2.Consumer welfare 5.Uplifting the quality of life
3.Job creation 6.Contributing to the
economy
SOCIO-ECONOMIC IMPACT OF A BUSINESS
A business has impact on the following sectors:
1.consumers
2.suppliers and investors
3.government
4.impact on the community
5.impact on the household
1.BUSINESS IMPACT ON THE CONSUMERS
Consumers expect that a new business means new
products.
Consumers always expects a return to the value of
their money.
If a new business is selling a product with close
substitute , the owner will try his best to win the
customers of the existing sellers.

TYPES OF CONSUMERS:
1.Price conscious 2.Quality conscious 3.Value conscious
2.BUSINESS IMPACT ON SUPPLIERS AND INVESTORS
 A new business will also provide opportunities for
suppliers and investors.
 The demand for the item supplied will
increase , production shall also increase and there will
be a need to hire employees.

3.BUSINESS IMPACT ON THE GOVERNMENT

 The government benefits from new businesses thru
revenues from fess collected and on imposed taxes.
 Before a business could set up ,it should apply for a
 license , pay organizational fees.

 On the Municipal Level , the local government earns

revenue from fees and license .These revenue were added
to their local budget to be used for the following purpose:
1.provide social services to the community
2.for the development of the community
3.to pay salaries of local officials and workers
4.to maintain peace and order
5.To subsidize public schools
On the National Level:
 The National government earns revenues from taxes of
the business and the taxes of employees paid by the
business.

BIR (Bureau of Internal Revenue) agency of the

government that collects taxes on the national level.

The taxes collected by the government thru BIR are used

for the following purpose:
1.National Activities
2.Budget allocation for government programs
3.Finance government projects
4.Pay salary of government officials
5.Build schools
6.Improve military system
7.Promote peace and order allover the country
8.Build housing projects for the poor
9.Provide health services
10.Improve welfare programs
4.BUSINESS IMPACT ON THE COMMUNITY

CSR (Corporate Social Responsibility)has become a

growing trend
 Corporations and even small businesses have
increased their focus on projects that provides
scholarships to poor but deserving students
 Allocating budget for housing programs for low-
income families
 Participation in programs such as Gawad Kalinga
 Environmental protection including tree planting
 Elimination of pollution and other environmental
programs
 Communities benefit from business-sponsored
activities that includes sports fest , wellness programs ,
livelihood projects , micro financing , as well as medical
and dental missions

5.BUSINESS IMPACT ON HOUSEHOLDS

 New business means new employment for the
Filipinos
 Opportunity for better paying jobs
 New job opportunities means decrease in the rate of
unemployment.
 Being employed will enable households to improve the
quality of living.
Acquisition of wealth is both for the business owner and
the employees they hire.
 Being part of household , business owners can invest
their profits back into the business for expansion or buy
new cars or new houses.
 Success stories of rags-to-riches businessmen inspires
and influences household and earns high level of trust.
 Instilling the of value of recycling and reusing resources
among employees and family members may also become
the advocacy of these businesses.
 Spreading information on the dangers of global warming
may be promoted by business owners.
 Businesses become instruments for the society to have a
better place to live in.