UTILITY AND

APPLICATION
OF APPLIED
ECONOMICS
TO SOLVE
ECONOMIC
ISSUES AND
PROBLEMS
 What to How to
BASIC
Produce? Produce?
PROBLEMS
OF
ECONOMY
For whom to
Produce?
 What to Produce?

It decides which
goods/service it want
to produce. Further, it
also determines the
quantity required.
 What to Produce?

Society must decide

the type and quantity
of every needed
single good/service to
be produced.
 How to Produce?

The production of a
good is possible by
various methods.
 How to Produce?

Firms should decide

what they are going
to use either capital –
intensive or labor –
intensive production.
 ECONOMIC UTILITY

-refers to the usefulness or

value that consumers
experience from a product
 FORM UTILITY

- Refers to how well a

product or service meets
the customer’s needs
 TIME UTILITY

- Exists when a company maximizes

the availability of a product so that
customers can buy it during the
times that are most convenient or
desirable for them.
 PLACE UTILITY

- Refers primarily to making

goods or services physically
available or accessible to
potential customers
 POSESSION UTILITY

- Is the amount of usefulness or

perceived value from owning a
product.
ECONOMIC SYSTEM
 ECONOMIC SYSTEM

Is characterized by the type of

institution responsible for the
management and allocation of
resources used in the product of and
services.
1. Market economic system
2. Command economic system
3. Mixed economic system
 Market Economic System

Is where all economic resources

are owned by private entities
This system proposed the following answers to the
three economic questions:
1. Produce goods that yield high profits;
2. Produce at maximum efficiency with minimum
costs; and
3. Distribute the goods to those who can afford
them.
 COMMAND ECONOMIC SYSTEM

Is where all resources are

owned by the government
 MIXED ECONOMIC SYSTEM

Is where all three questions are

answered by both the government
and private entities in
consideration of their mutual
benefit.