Term Paper (Final)

De La Salle UniversityDasmarias
1
Dasmarias City, Cavite
UTILITY AND BUDGET ALLOCATION OF DE LA SALLE
UNIVERSITY - DASMARIAS STUDENTS FOR
STARBUCKS FRAPPUCCINO
A Term Paper Presented to

The Faculty of the Allied Business Department
College of Business Administration
De La Salle University-Dasmarias
City of Dasmarias
Cavite
In Partial Fulfillment
Of the Requirements for the Course
Microeconomic Theory
ECON201a
Bautista, Lourene V.
Berona, Patrick C.
Lontoc, Camille Anne R.
Villaluna, Mikee Abigail C.
BSA21
February 17, 2014
2
TABLE OF CONTENTS
Title Page...1
Table of Contents...2
Introduction .3
Background of the Study . 3
Statement of the Problem . 4
Objectives of the Study 5
Hypotheses of the Study. . 5
Significance of the Study...6
Scope and Limitation 7
Review of Related Literature ... 8

Conceptual Framework..26
Methodology...28
Results and Discussion .. 31
Conclusion and Recommendation. 49
References50
Appendices .52
3
CHAPTER I
INTRODUCTION
Background of the Study

Today, advertisement emanates in a wide variety of range from televisions
and radios to billboards, magazines, newspapers and even in the internet. With this
fact, individual businesses take the opportunity to market their products in the best
efficient way possible for their products to be famous. Among the most marketed
products, nowadays, is coffee.
Filipinos are natural consumers of coffee. They start their day drinking
coffee, even during break time or at night when they are doing their class or office
requirements. Coffee industries are well-aware of this fact that they produce coffee
products that are unique and exceptional for consumers to patronize. One of the
biggest and popular coffee companies not only in the Philippines but in the world
is Starbucks Coffee Company. Starbucks, as most people would call it, was a name
inspired by Moby Dick and was opened initially on 1971 as a single store in
Seattles historic Pike Place Market. Their everyday service has a goal of two
things: to share great coffee with friends and to help make the world a little bit
4
better. They had a vision of putting up a place for conversation and a sense of
community. A third place between work and home. With this vision, Starbucks
became popular and had over 18,000 stores in 62 countries worldwide.
In the Philippines, Starbucks coffees and other products are considered
affordable luxuries serving high-quality products with its light ambience and wellrounded staff and crew that over the years it gained consumers. This demand of
consumers fuelled our desire to conduct a study for generally determining their
total and marginal utilities and budget allocation for Starbucks Frappuccino.
Statement of the Problem

Starbucks a coffee company that sells high-quality whole bean coffees
have, over the years, increased its net sales to about 25% according to some
researchers because of its affordable luxury products. Its primary target market
includes both men and women aged 25-40 years old but due to its prevalence, its
products are marketed even to different market segments and demographics. Due
to this, the proponents of this study aim to determine the Utility and budget
allocation of DLSU-D students for Starbucks Frappuccino. Specifically, this study
aims to answer the following questions:
1. What is DLSU-D students total utility from consuming Starbucks
Frappuccino?
5
2. What is DLSU-D students marginal utility from consuming Starbucks
Frappuccino?
3. What is the average budget allocation of DLSU-D students in consuming
Starbucks Frappuccino?
4. What is the effect of price change on the quantity demanded of Starbucks
Frappuccino?
Objectives of the Study

Generally, this study aims to determine the utility and budget allocation of
DLSU-D students for Starbucks Frappuccino.
Specifically it aims:
To determine DLSU-D students total utility from consuming Starbucks
Frappuccino
To determine DLSU-D students marginal utility from consuming Starbucks
Frappuccino
To determine the average budget allocation of DLSU-D students in
consuming Starbucks Frappuccino

To determine the effect of price change on the quantity demanded of
Starbucks Frappuccino
Hypotheses of the Study

Since the purpose of this study is to determine the utility and budget
allocation of De La Salle University Dasmarias (DLSU-D) students for
6
Starbucks Frappuccino, the proponents, in relation to Microeconomic Theory,
formulated the following hypotheses:
1. There is a negative relationship between the price and the quantity
demanded of Starbucks Frappuccino.
2. As more of Starbucks Frappuccino is consumed, less utility is added from
the last unit consumed.
3. There is a positive correlation between Consumption and Weekly
Allowance as well as Consumption and Budget Allocation.
Significance of the Study
This study that aims to ascertain and analyze in a profound manner the
utility and budget allocation of De La Salle University Dasmarias (DLSU-D)
students for Starbucks Frappuccino will benefit first, the consumers themselves
because this study will reveal their unrealized perceptions about Starbucks
Frappuccino. It will also unravel their identities as purchasers of goods and
services. Through this study, the consumers will be aware of how their budgets are
limited and how it will be effectively allocated such that their satisfaction for
consuming Starbucks Frappuccino will be maximized. Second, this study will
benefit the coffee industries in a way that they will be aware of the maximum
budget allocation of consumers in purchasing their products so that they will be
able to maximize their profit and sales. Finally, this study will benefit students such
7
that they will be aware of economic concepts such as total and marginal utilities
and effects of budget constraint to consumption.
Scope and Limitations
This study focuses on determining and vividly elaborating the total and
marginal utilities of De La Salle University Dasmarias (DLSU-D) students for
Starbucks Frappuccino and their budget allocation for such product. It will also
discuss how age, gender, size of household and budget allowance affects quantity
demanded for Starbucks Frappuccino.
This study is not limited to only
determining the average budget allocation of DLSU-D students for Starbucks

Frappuccino but also to determine their consumption for such product given a
limited budget. It will also cover how an increase in budget will affect their
consumption for Starbucks Frappuccino.
8
CHAPTER II
REVIEW OF RELATED LITERATURE
The Utility Theory of Demand

Why do you buy the goods and services you do? It must be because they
provide you with satisfactionyou feel better off because you have purchased
them. Economists call this satisfaction utility.
Utility is an economic term referring to the total satisfaction received from
consuming a good or service. The utility theory explains consumer behavior in
relation to the satisfaction that a consumer gets the moment he consumes a good.
When we speak of utility in economics, we refer to the satisfaction or benefit that a
consumer derives of his consumption. The utility theory of demand assumes that
satisfaction can be measured. The unit of measure of utility is called utils.
The concept of utility is an elusive one. A person who consumes a good
gains utility from eating that good. But we cannot measure this utility the same
way we can measure that goods weight or calorie content. There is no scale we can
use to determine the quantity of utility that good generates.
When we speak of maximizing utility, then, we are speaking of the
maximization of something we cannot measure. We assume, however, that each
9
consumer acts as if he or she can measure utility and arranges consumption so that
the utility gained is as high as possible.
Total Utility
If we could measure utility, total utility would be the number of units of
utility that a consumer gains from consuming a given quantity of a good, service,
or activity during a particular time period. The higher a consumers total utility, the
greater that consumers level of satisfaction.
Panel (a) of Figure 1.1, Total Utility and Marginal Utility Curves shows
the total utility Henry Higgins obtains from consuming Good X. In drawing his
total utility curve, we are imagining that he can measure his total utility. The total
utility curve shows that when Mr. Higgins consumes no good x during a month, his
total utility from consuming good x is zero. As he increases the number of
consumption he sees, his total utility rises. When he consumes 1 good x, he obtains
36 units of utility. When he consumes 4 of good x, his total utility is 101. He
achieves the maximum level of utility possible, 115, by consuming 6 of good x per
month. Consuming the seventh movie adds nothing to his total utility.
10
Figure 1. Total Utility and Marginal Utility Curves
11
Panel (a) shows Henry Higginss total utility curve for consuming good x.
It rises as the number of consumption increases, reaching a maximum of 115 units
of utility at 6 of good x per month. Marginal utility is shown in Panel (b); it is the
slope of the total utility curve. Because the slope of the total utility curve declines
as the number of consumption increases, the marginal utility curve is downward
sloping.
Mr. Higginss total utility rises at a decreasing rate. The rate of increase is
given by the slope of the total utility curve, which is reported in Panel (a) of
Figure 1.1, Total Utility and Marginal Utility Curves as well. The slope of the
curve between 0 good x and 1 good x is 36 because utility rises by this amount
when Mr. Higgins consumes his first good x in the month. It is 28 between 1 and 2
good x, 22 between 2 and 3, and so on. The slope between 6 and 7 good x is zero;
the total utility curve between these two quantities is horizontal.
Marginal Utility
It can be described as the extra, satisfaction which a consumer gets from
consuming additional unit of a good. More precisely, it is defined as the addition to
the total utility obtained from the consumption of one more unit. It is the amount
by which total utility rises with consumption of an additional unit of a good,
12
service, or activity, all other things unchanged, is marginal utility. The first good x
Mr. Higgins consumes increases his total utility by 36 units. Hence, the marginal
utility of the first good x is 36. The second increases his total utility by 28 units; its
marginal utility is 28. The seventh good x does not increase his total utility; its
marginal utility is zero. Notice that in the table marginal utility is listed between
the columns for total utility because, similar to other marginal concepts, marginal
utility is the change in utility as we go from one quantity to the next. Mr. Higginss
marginal utility curve is plotted in Panel (b) of Figure 1.1, Total Utility and
Marginal Utility Curves The values for marginal utility are plotted midway
between the numbers of good x consumed. The marginal utility curve is downward
sloping; it shows that Mr. Higginss marginal utility for good x declines as he
consumes more of them.
Mr. Higginss marginal utility from good x is typical of all goods and
services. Suppose that you are really thirsty and you decide to consume a soft
drink. Consuming the drink increases your utility, probably by a lot. Suppose now
you have another. That second drink probably increases your utility by less than the
first. A third would increase your utility by still less. This tendency of marginal
utility to decline beyond some level of consumption during a period is called
the law of diminishing marginal utility. This law implies that all goods and services
eventually will have downward-sloping marginal utility curves. It is the law that
13
lies behind the negatively sloped marginal benefit curve for consumer choices that
we examined in the chapter on markets, optimizers, and efficiency.
One way to think about this effect is to remember the last time you ate at an
all you can eat cafeteria-style restaurant. Did you eat only one type of food? Did
you consume food without limit? No, because of the law of diminishing marginal
utility. As you consumed more of one kind of food, its marginal utility fell. You
reached a point at which the marginal utility of another dish was greater, and you
switched to that. Eventually, there was no food whose marginal utility was great
enough to make it worth eating, and you stopped.
What if the law of diminishing marginal utility did not hold? That is, what
would life be like in a world of constant or increasing marginal utility? In your
mind go back to the cafeteria and imagine that you have rather unusual
preferences: Your favorite food is creamed spinach. You start with that because its
marginal utility is highest of all the choices before you in the cafeteria. As you eat
more, however, its marginal utility does not fall; it remains higher than the
marginal utility of any other option. Unless eating more creamed spinach somehow
increases your marginal utility for some other food, you will eat only creamed
spinach. And until you have reached the limit of your bodys capacity (or the
restaurant managers patience), you will not stop. Failure of marginal utility to
diminish would thus lead to extraordinary levels of consumption of a single good
14
to the exclusion of all others. Since we do not observe that happening, it seems
reasonable to assume that marginal utility falls beyond some level of consumption.
Maximizing Utility
Economists assume that consumers behave in a manner consistent with the
maximization of utility. To see how consumers do that, we will put the marginal
decision rule to work. First, however, we must reckon with the fact that the ability
of consumers to purchase goods and services is limited by their budgets.
The Budget Constraint

The total utility curve in Figure 1.1, Total Utility and Marginal Utility
Curves shows that Mr. Higgins achieves the maximum total utility possible from
good x when he consumes six of them each month. It is likely that his total utility
curves for other goods and services will have much the same shape, reaching a
maximum at some level of consumption. We assume that the goal of each
consumer is to maximize total utility. Does that mean a person will consume each
good at a level that yields the maximum utility possible?
The answer, in general, is no. Our consumption choices are constrained by
the income available to us and by the prices we must pay. Suppose, for example,
that Mr. Higgins can spend just $25 per month for food and that the price of good x
15
is $5. To achieve the maximum total utility from good x, Mr. Higgins would have
to exceed his food budget. Since we assume that he cannot do that, Mr. Higgins
must arrange his consumption so that his total expenditures do not exceed
his budget constraint: a restriction that total spending cannot exceed the budget
available.
Suppose that in addition to movies, Mr. Higgins enjoys good y, and the
average price of good y is $10. He must select the number of good x he sees and
good y he attends so that his monthly spending on the two goods does not exceed
his budget.
Individuals may, of course, choose to save or to borrow. When we allow
this possibility, we consider the budget constraint not just for a single period of
time but for several periods. For example, economists often examine budget
constraints over a consumers lifetime. A consumer may in some years save for
future consumption and in other years borrow on future income for present
consumption. Whatever the time period, a consumers spending will be constrained
by his or her budget.
To simplify our analysis, we shall assume that a consumers spending in
any one period is based on the budget available in that period. In this analysis
consumers neither save nor borrow. We could extend the analysis to cover several
periods and generate the same basic results that we shall establish using a single
16
period. We will also carry out our analysis by looking at the consumers choices
about buying only two goods. Again, the analysis could be extended to cover more
goods and the basic results would still hold.
Applying the Marginal Decision Rule

Because consumers can be expected to spend the budget they have, utility
maximization is a matter of arranging that spending to achieve the highest total
utility possible. If a consumer decides to spend more on one good, he or she must
spend less on another in order to satisfy the budget constraint.
The marginal decision rule states that an activity should be expanded if its
marginal benefit exceeds its marginal cost. The marginal benefit of this activity is
the utility gained by spending an additional $1 on the good. The marginal cost is
the utility lost by spending $1 less on another good.
How much utility is gained by spending another $1 on a good? It is the
marginal utility of the good divided by its price. The utility gained by spending an
additional dollar on good X, for example, is
This additional utility is the marginal benefit of spending another $1 on the good.
Suppose that the marginal utility of good X is 4 and that its price is $2.
Then
an
extra
$1
spent
on X
buys
additional
units
of
utility
17
(
). If the marginal utility of good X is 1 and its price is
$2, then an extra $1 spent on X buys 0.5 additional units of utility (

).
The loss in utility from spending $1 less on another good or service is
calculated the same way: as the marginal utility divided by the price. The marginal
cost to the consumer of spending $1 less on a good is the loss of the additional
utility that could have been gained from spending that $1 on the good.
Suppose a consumer derives more utility by spending an additional $1 on
good X rather than on good Y:
Equation 1 .1
The marginal benefit of shifting $1 from good Y to the consumption of

good X exceeds the marginal cost. In terms of utility, the gain from spending an
additional $1 on good X exceeds the loss in utility from spending $1 less on good
Y. The consumer can increase utility by shifting spending from Y to X.
As the consumer buys more of good X and less of good Y, however, the
marginal utilities of the two goods will change. The law of diminishing marginal
utility tells us that the marginal utility of good X will fall as the consumer
consumes more of it; the marginal utility of good Y will rise as the consumer
18
consumes less of it. The result is that the value of the left-hand side of Equation 1.1
will fall and the value of the right-hand side will rise as the consumer shifts
spending from Y to X. When the two sides are equal, total utility will be
maximized. In terms of the marginal decision rule, the consumer will have
achieved a solution at which the marginal benefit of the activity (spending more on
good X) is equal to the marginal cost:
Equation 1.2
We can extend this result to all goods and services a consumer uses. Utility
maximization requires that the ratio of marginal utility to price be equal for all of
them, as suggested in Equation 1.3:
Equation 1.3
Equation 1.3 states the utility-maximizing condition: Utility is maximized

when total outlays equal the budget available and when the ratios of marginal
utilities to prices are equal for all goods and services.
Consider, for example, the shopper introduced in the opening of this
chapter. In shifting from cookies to ice cream, the shopper must have felt that the
marginal utility of spending an additional dollar on ice cream exceeded the
marginal utility of spending an additional dollar on cookies. In terms of
19
Equation 1.1, if good X is ice cream and good Y is cookies, the shopper will have
lowered the value of the left-hand side of the equation and moved toward the
utility-maximizing condition, as expressed by Equation 1.1.
The Problem of Divisibility

If we are to apply the marginal decision rule to utility maximization, goods
must be divisible; that is, it must be possible to buy them in any amount. Otherwise
we cannot meaningfully speak of spending $1 more or $1 less on them. Strictly
speaking, however, few goods are completely divisible.
Even a small purchase, such as an ice cream bar, fails the strict test of being
divisible; grocers generally frown on requests to purchase one-half of a $2 ice
cream bar if the consumer wants to spend an additional dollar on ice cream. Can a
consumer buy a little more movie admission, to say nothing of a little more car?
In the case of a car, we can think of the quantity as depending on
characteristics of the car itself. A car with a compact disc player could be regarded
as containing more car than one that has only a cassette player. Stretching the
concept of quantity in this manner does not entirely solve the problem. It is still
difficult to imagine that one could purchase more car by spending $1 more.
20
Remember, though, that we are dealing with a model. In the real world,
consumers may not be able to satisfy Equation 1.3 precisely. The model predicts,
however, that they will come as close to doing so as possible.
Indifference Preference Theory

Another theory explaining consumer behavior is the indifference preference
theory. Economist Vilfredo Pareto developed this modern approach to consumer
behavior. Under this, that analysis of consumer behaviour is described in terms of
consumer preferences of various combinations of goods and services depending on
the nature, rather than from the measurability of satisfaction in our previous
discussion of the utility theory. Under the latter theory, consumer's taste and
preferences were presented by the way of total and marginal utility.
Indifference Curve
An indifference curve is a locus of points each of which represents a
combination of goods and services that will give equal level of satisfaction to a
consumer. To illustrate this, we consider an individual who prefer a combination of
2 goods, say, food and clothing. Table 3 shows the combination of the quantities of
the commodities that a consumer prefers. Let us assume that he is indifferent to any
of the combination of food and clothing.
21
Starbucks
Starbucks Corporation is an American global coffee company and
coffeehouse
chain based
in Seattle, Washington.
Starbucks
is
the
largest
coffeehouse company in the world, with 20,891 stores in 62 countries, including

13,279 in the United States, 1,324 in Canada, and 806 in the United Kingdom. In
addition, Starbucks is an active member of the World Cocoa Foundation.
Starbucks locations serve hot and cold beverages, whole-bean coffee,
microground instant coffee, full-leaf teas, pastries, and snacks. Most stores also sell
pre-packaged food items, hot and cold sandwiches, and items such as mugs
and tumblers. Starbucks Evenings locations also offer a variety of beers, wines, and
appetizers after 4pm. Through the Starbucks Entertainment division and Hear
Music brand, the company also markets books, music, and film. Many of the
company's products are seasonal or specific to the locality of the store. Starbucksbrand ice cream and coffee are also offered at grocery stores.
From Starbucks' founding in 1971 as a Seattle coffee bean roaster and
retailer, the company has expanded rapidly. Since 1987, Starbucks has opened on
average two new stores every day. Starbucks had been profitable as a local
company in Seattle in the early 1980s but lost money on its late 1980s expansion
into the Midwest and British Columbia. Its fortunes did not reverse until the fiscal
22
year of 1989-1990, when it registered a small profit of $812,000. By the time it
expanded into California in 1991 it had become trendy. The first store outside the
United States or Canada opened in Tokyo in 1996, and overseas stores now
constitute almost one third of Starbucks' stores. The company planned to open a net
of 900 new stores outside of the United States in 2009, but has announced 300
store closures in the United States since 2008.
History of Starbucks
The history of Starbucks starts back in 1971 when the first store opened in
Seattle, Washington. Jerry Baldwin, Zev Siegl and Gordon Bowker got the idea
from Alfred Peet (of Peet's Coffee fame). The store initially sold just coffee beans
and coffee making equipment rather than the drinks they have become so famous.
After about 10 years, Howard Schultz was hired as Director of Retail Operations
and came to the conclusion that they should be selling drinks rather than just beans
and machines. He couldn't convince the owners, so he went his own way to start
the Il Giornale chain of coffee bars in 1986.
The next year, Baldwin and the others sold Starbucks to Schultz who then
renamed his Il Giornale locations to Starbucks and quickly started to expand. After
conquering Seattle, the chain spreads across the United States and then
internationally. The first location outside of North America was in Tokyo and they
23
still have a sizable presence in Japan today. Over the course of its history,
Starbucks has bought or acquired companies like Peet's and Seattle's Best Coffee,
and took over many locations of Coffee People and Diedrich Coffee stores. In the
1990s, Starbucks was offering stock options to employees and went public. Today,
Starbucks has expanded to more than 17,000 stores in 55 countries around the
world. Their biggest presence is still in the United States, with 11,000 locations.
You can find a Starbucks in such diverse nations as Chile, Romania, Bahrain and
Bulgaria. The most recent expansion was to Budapest in June of 2010.
The companys logo was initially a wood-cut style image of a 2-tailed
mermaid or siren, but it has undergone a lot of changes over time. The historical
original design had the mermaid with bare breasts, but the modern version has
become more stylized and her hair covers her body.
The name comes from Captain Ahab's first mate in the classic novel Moby
Dick, who was named Starbuck. Aside from the ubiquitous coffee shops, they also
own the Hear Music label and Ethos bottled water. Though they are unquestionably
a successful company, Starbuck's history does have its share of controversy. Their
habit of taking over other smaller businesses and forcing out competitors have
given Starbucks the reputation of being too corporate and too powerful for the laidback world of coffeehouses. The chain has also had lawsuits involving their tip
policies for their employees. But they also promote Fairly Traded coffee products
24
and have also made strides in recycling with their paper cups and and supplies. So
the history of Starbucks really does have both its ups and downs in terms of public
perception and opinion.
Why has Starbucks customer satisfaction scores declined?

Starbucks customer satisfaction scores began to decline despite the fact of
Starbucks overwhelming presence and convenience. There was very little image or
product differentiation between Starbucks and the smaller coffee chains. However,
there was a significant differentiation between Starbucks and the independent
specialty coffeehouses. The brand image of Starbucks also had some rough edges.
More customers were beginning to agree with the fact the Starbucks cared
primarily about making money and building more stores. Also, despite the high
customer snapshot scores customer satisfaction scores were declining. It was
believed that there was a service gap between Starbucks scores on key attributes
and customer satisfaction. In polls by customers improvements to service,
particularly speed of service, was most mentioned for improvement.
Has the companys service declined or is it simply measuring satisfaction the

wrong way?
25
The overall company service has not necessarily declined. Overall,
customers are pleased with the cleanliness, atmosphere, and product quality.
However, wait time is steadily increasing. This is the main problem. While some
people go to Starbucks for the experience, many people get their coffee and are out
the door. Therefore, wait time is exceedingly important. This is where the
satisfaction has begun to decline. While wait time is a part of customer satisfaction
it is not the only thing that determines customer satisfaction. The satisfaction level
of customers also varies with the type of customer. Customers that visit more often,
spend more often, and are more loyal tend to be more highly satisfied. Also,
Starbucks is measuring much on how people view the company, as trying to
expand and make more money, rather than how people view the coffee. Generally
customers are satisfied with the coffee. While customer service has declined some,
the main issue that should be addressed is the view itself of the Starbucks
organization.
What would it take to ensure that this customer is highly satisfied?

To ensure that the customer is highly satisfied with every element of the
their Starbucks experience, there are a few key factors, aside from the coffee itself
that the Starbucks stores and its employees must exhibit. From a Starbucks survey
in 2002, a clean store was the number one factor leading to customer satisfaction,
26
with 83%. If a store appears clean and has a high sanitation grade, customers will
be assured that what they are consuming has been made from and kept in a clean
environment.
Convenience is the next factor leading to customer satisfaction, with 77%.
Starbucks has done an excellent job with saturating the market. Customers love
having a Starbucks location on their normal traffic route, therefore not having to
drive out of their way for a cup of coffee. Having the drive-thru service has also
made a positive impact for the convenience factor. Other factors that ranked highly
for customer satisfaction were being treated as a valuable customer (75%) and
friendly staff (73%).
27
CHAPTER III
CONCEPTUAL FRAMEWORK
Price of Starbucks
Frappuccino
CONSUMER CHOICE
FACTORS
Allocated Budget
for Starbucks
Frappuccino
Quantity Demanded
of DLSU-D Students
for Starbucks
Frappuccino
Total Utility and
Marginal Utility of
DLSU-D Students in
consuming
Starbucks
Weekly Allowance
Figure 2. Conceptual Framework for the Utility and Budget Allocation of

DLSU-D students for Starbucks Frappuccino
28
The conceptual framework presented depicts the effect of the independent

variables to the dependent variables. In this case, the independent variables are: the
price of Starbucks Frappuccino, the allocated budget for Starbucks Frappuccino,
and the respondents' weekly allowance. On the other hand, the dependent variables
are the quantity demanded of DLSU-D students for Starbucks Frappuccino and the
total and marginal utilities of DLSU-D students in consuming the product.
According to the Law of Demand, all else equal, quantity demanded and
the price of a commodity are inversely related. Thus, if the price of a commodity
increases, quantity demanded decreases and vice versa.
Additionally, according to the very essence of budget constraint,
consumer's choice of goods to consume is dependent on the consumer's budget
thus, relating to the above-presented conceptual framework, if the consumers were
to allot a specific amount of their allowances to Starbucks Frappuccino a question
will arise: "How many tall-sized Starbucks Frappuccino will they consume?" Thus,
given their limited budgets and the price of the good (Starbucks Frappuccino)
come the respective effects on quantity demanded and utilities for the
consumption.
29
CHAPTER IV
METHODOLOGY
The aim of this chapter is to describe the methodology used in this study, to
depict the procedures applied in gathering the data and to explain the statistical
instruments used in analyzing and interpreting the data gathered.
Participants
The participants of the study are composed of 100 randomly selected
students of De La Salle University-Dasmarias. College students will best suit the
purpose of the survey because it focused on the satisfaction of a consumer for a
well-known product, the Starbucks Frappuccino.
Data Gathering
Online poll was first used by the researchers to determine the specific good
that will give the highest probability of having respondents. After determining
such, online and written surveys were administered to reach the possible maximum
number of respondents depending on the circumstances. Aiming for a larger scope
may give the researchers more reliable results. The online survey was created by
the researchers in a certain website and thoroughly shared it to DLSU-D students
in a social networking site. The researchers gathered the data through executing the
30
snowball sampling. Through this, the researchers were able to reach the target
population easily. Marginal utility may be a strange topic to several DLSU-D
students, therefore, survey questions were simplified and an ordinal ranking was
used to effectively reach the goal. The researchers also made use of the Online
Public Access Catalog (OPAC) of the Aklatang Emilio Aguinaldo to further study
the topic and analyze the results with the help of some related literary documents.
Data Analysis
To realistically determine the total and incremental satisfaction and the
average budget allowance of a DLSU-D student, apportioned to the consumption
of Starbucks Frappuccino, as well as the effect of price change on a consumers
demand for a good, the researchers used a descriptive approach. According to
Nebeker(2007), a descriptive study is one in which information is collected without
changing the environment, or without manipulating any variable. This entails that
data will be recorded and simplified through statistical concepts such as averages
and percentages while the researchers only describe the actual results without any
further experimentation. The purpose of identifying variables is to sensibly test and
prove the truthfulness of the economic theories such as the total and marginal
utility, and demand for a certain good. The independent variable is the incremental
satisfaction a consumer gets from consuming Starbucks Frappuccino while the
31
dependent variables are the units of the good consumed each day and the price of
it.
The researchers used a descriptive statistics which is comprised of basic
measures, frequency distribution, percentages and averages. Basic measure such as
the mean, median and mode were used to determine the average rate of satisfaction
for Starbucks Frappuccino and to know the most frequent answer of the
respondents for the price at which the consumer increases or decreases demand and
wherein a consumer still gets a positive amount of satisfaction, respectively. The
researchers also used other methods such as Analysis of Variance (ANOVA),
Correlation Matrix, and the like.
32
CHAPTER V
RESULTS AND DISCUSSION
Descriptive Statistics
Data gathered regarding demographic profile were graphed and analyzed
by the researchers. Shown in this section the results and discussion.
Number of Respondents
Age of the Respondents
Age (in years)

Figure 3.Age of the respondents expressed in years
The figure above shows the number of respondents from each age level.
There are three respondents who are 16 years old, 34 who are 17 years old, 48 who
are 18 years old, eight who are 19 years old, three who are 20 years old, three who
33
are 21 years old, none from 22 and 23 years old, and one who is 24 years old. Most
respondents are 18 years old with 48% of the total respondents and the least are 22
and 23 years old with no respondents.
Figure 4. Gender of the respondents
The figure above shows the gender of the respondents of the study. There
are more female respondents, with 65 students or 65%, than male respondents,
with 35 students or 35%.
34
Figure 5.Residency of the respondents, whether urban or rural
The figure above shows the residency of the respondents of the study. There
are more respondents who live in urban places, with 73 students or 73%, than in
rural areas, with 73 students or 73%.
35
Size of Household
Number of Household
Figure 6.Household size of the respondents
The figure above shows the number of respondents from each number of
household. Most respondents have 5 households which represent 34% of the total
respondents and the least respondents have one, ten, and eleven household.
36
Number of Siblings
Number of Siblings
Figure 7.Respondents number of siblings
The figure above shows the number of respondents from each of the
indicated number of siblings. There are seven respondents who have no siblings,
24 who have only one sibling, 28 who have two siblings, 24 who have three
siblings, 9 who have four siblings, 5 who have five siblings, 2 who have six
siblings, 0 who have seven siblings, and a lone student who have 8 siblings. Most
37
respondents have 2 siblings with 28% of the total respondents and the least have 7
siblings with no respondents.
Mean
Standard Error
Median
Mode
Standard Deviation
Sample Variance
Kurtosis
Skewness
Range
Minimum
Maximum
Sum
Count
Age of
Respondents
17.89
0.113613735
18
18
1.136137351
1.290808081
8.536836196
2.201972439
8
16
24
1789
100
Household
Size
4.93
0.164688258
5
5
1.646882577
2.712222222
1.881980435
0.930914418
10
1
11
493
100
Number of
Siblings
2.33
0.147062139
2
2
1.47062139
2.162727273
1.512059733
0.90556708
8
0
8
233
100
Table 1. Descriptive statistics of the respondents demographic profile
Age of Respondents
The table above shows that the average age of the respondents is 17.89
years old and majority is 18 years old. The standard deviation is 1.14, which
means that the age is merely close to each other. The kurtosis is 8.54, which means
that there is leptokurtic distribution. The skewness is 2.2, which means that there
is right skewed distribution. The youngest of all the respondents is 16 years old and
the oldest is 24 years old.
38
Household Size
The table above shows that the average household size of the respondents is
4.93and majority is 5. The standard deviation is 1.65, which means that the
household size is merely close to each other. The kurtosis is 1.88, which means that
there is platykurtic distribution. The skewness is 0.93, which means that there is
right skewed distribution.
Number of Siblings
The table above shows that the average number of siblings of the
respondents is 2.33 and that the majority has 2 siblings. The standard deviation is
1.47, which means that the number of siblings is merely close to each other. The
kurtosis is 1.51, which means that there is platykurtic distribution. The skewness is
0.91, which means that there is right skewed distribution. There are respondents
who have no siblings and a lone respondent has the highest number of siblings,
which is 8.
Gender
Male
Female
35
65
Residency
Urban
Rural
73
27
39
Table 2. Gender and residency tally
Gender
65 out of 100 respondents or 65% are female while 35 out of 100
respondents or 35% are male.
Residency
73 out of 100 respondents or 73% live in urban areas while 27 out of 100 or
27% are in rural areas.
Utility
In this section, let us assume that satisfaction or what we call utility in
economics can be measured, price does not affect the quantity demanded, there is
no substitute for the good and taste and preferences remains constant. This
assumptions will clearly show how utility changes as more of a good is consumed.
Satisfac
tion
5
4
3
2
1s
t
cu
p
55
21
10
5
2n
d
cu
p
36
36
12
7
3r
d
cu
p
20
34
24
7
4t
h
cu
p
5
32
34
8
5t
h
cu
p
5
13
36
23
6t
h
cu
p
3
8
20
28
7t
h
cu
p
4
5
18
15
8t
h
cu
p
5
2
15
11
9t
h
cu
p
5
5
8
6
10
th
cu
p
8
3
6
3
40
1
0
Total
7
2
10
0
4
5
10
0
9
6
10
0
10
11
10
0
7
16
10
0
20
21
10
0
27
31
10
0
24
43
10
0
24
52
10
0
11
69
10
0
Table 3. Number of respondents in a given unit and rate of satisfaction
Nth unit of Starbucks Frappuccino

Figure 8. Satisfaction for every additional cup of Starbucks Frappuccino in a Single Day
Consumption
2 out of 100 DLSU-D students obtain a zero satisfaction while 55 of

them obtain a 100% satisfaction from consuming the 1st cup. 4 out of them obtain
20% satisfaction while 36 of them obtain 80% and 100% satisfaction from
consuming the 2nd cup. 6 of them obtain 0% satisfaction while 34 of them obtain
41
80% satisfaction from consuming the 3rd cup. 5of the students obtain 100%
satisfaction while 34 of them obtain a 60% satisfaction from consuming the 4th cup.
5 of the students obtain 100% satisfaction while 36 of them obtain 60% satisfaction
from consuming the 5th cup. 3 of the students obtain 100% satisfaction while 28 of
them obtain 40% satisfaction from consuming the 6 th cup. 4 of the students obtain
100% satisfaction while 31 of them obtain 0% satisfaction from consuming the 7 th
cup. 2 of the students obtain 80% satisfaction while 43 of them obtain 0%
satisfaction from consuming the 8th cup. 5 of the students obtain 100% and 80%
satisfaction while 52 of them obtain 0% satisfaction from consuming the 9th cup.
Lastly, 3 of the students obtain 80% and 40% satisfaction while 69 of them obtain
0% satisfaction from consuming the 10th cup of Starbucks Frappuccino.
Looking closely on the graph above, incremental satisfaction between
0% and 100% either increases as more cup of Starbucks Frappuccino is consumed
then consequently decreases or is fluctuating. The 100% satisfaction decreases then
increased for only 2% then again decreased. This represents the different levels of
preferences for every individual. Therefore, a clear demonstration of the
relationship of this data to the law of diminishing marginal utility can be attained
through using averages.
The figure above shows the number of respondents that have a rate of 1, 2,
3, 4 and 5 as their satisfaction for every additional cup of Starbucks Frappuccino.
42
As you can see in the graph, additional cup of the good positively affects the
number of respondents that gives a zero satisfaction. This means that as more cups
of Starbucks Frappuccino are consumed at no cost, dissatisfied DLSU-D students
increases. On the contrary, as more cups of Starbucks Frappuccino are consumed in
a day at no cost, number of students who obtain 100% satisfaction decreases. Lets
simplify the relationship of 0% and 100% satisfaction through the graph below.
Satisfaction in a Single Day Consumption of Starbucks Frappuccino
Figure 9. Decreasing satisfaction as consumption increases in a single day
Satisfac
tion
100%
0%
1s
t
cu
p
55
2
2n
d
cu
p
36
5
3r
d
cu
p
20
6
4t
h
cu
p
5
11
5t
h
cu
p
5
16
6t
h
cu
p
3
21
7t
h
cu
p
4
31
8t
h
cu
p
5
43
9t
h
cu
p
5
52
Table 4. Number of respondents in a given 0% and 100% satisfaction
10
th
cu
p
8
69
43
Total Utility and Marginal Utility
Marginal
Utility
Total Utility
1s
t
cu
p
4.0
6
4.0
6
2n
d
cu
p
3.7
8
7.8
4
3rd
cup
4th
cup
5th
cup
6th
cup
7th
cup
8th
cup
9th
cup
10t
h
cup
3.31
2.81
2.38
1.83
1.51
1.24
1.05
0.87
11.1
5
13.9
6
16.3
4
18.1
7
19.6
8
20.9
2
21.9
7
22.8
4
Table 5. Marginal utility and total utility of DLSU-D students for Starbucks Frappuccino
44
Total Utility
Marginal Utility
Units of Starbucks Frappuccino
Units of Starbucks Frappuccino

Figure 10. Total utility and marginal utility of DLSU-D students for Starbucks Frappuccino
45
The figure above shows the graph of the total and marginal utility of
Starbucks Frappuccino consumers derived from the data gathered. The total utility
accumulated amounts to approximately 22.8 utils from consuming 10 cups of
Starbucks Frappuccino a day. The marginal utility obtained through consuming 1 st,
2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th, and 10th cup are 4.1 utils, 3.8 utils, 3.3 utils, 2.8 utils.
2.4 utils, 1.8 utils, 1.5 utils, 1.2 utils, 1.1 utils,0.9 utils respectively.
The incremental satisfaction derived from consumption of Starbucks
Frapuccino decreases as every additional cup is consumed at no cost. Therefore,
this graph purely represents the taste and preferences of selected DLSU-D students
for Starbucks Frappuccino. This means that prices did not affect any of the given
data.
As you can see in the graph, the total utility accumulated up to the last
cup of Starbucks Frappuccino consumed bears the least marginal utility obtained
from consuming every cup. Although the last marginal utility derived from the
collected data does not equate to zero, it represents the least among all. This means
that an economic theory was strongly proved. The results conform with the
hypotheses of the researchers that as more Starbucks Frappuccino is consumed,
less satisfaction is added to the last unit consumed. This is the law of diminishing
marginal utility.
46
Law of Diminishing Marginal Utility
According to Sarika Gugnani (2008), utility is the amount of satisfaction
derived from a commodity or service at a particular time. It cannot be measured in
reality but in economics, different case is assumed to measure the happiness a
consumer gets from consuming a particular good. This will help economists predict
the moment wherein rise and fall in quantity demanded is evident. In economics,
Utility is assumed to be measured through using the unit of measurement called
utils. Again, it is only a part of the assumption that satisfaction can be measured
but does not reflect the reality.
According to Sarika Gugnani (2008), total utility refers to the total
satisfaction derived by the consumer from the consumption of a given quantity of a
good. The utils are accumulated up to the last unit consumed to determine the sum
of all the utilities obtained from a particular good. Economists may use this as the
basis of the maximum unit of a particular good that a consumer can have wherein
there is still a positive satisfaction. Simply stated, total utility is the sum of all
utilities obtained from a given unit of good wherein the incremental satisfaction is
equal to 0. This is very important to know because beyond that unit of good will
give dissatisfaction for the consumer. Of course, when we buy something, our main
purpose is to be satisfied and not to be dissatisfied with it.
47
It is realistic that as more unit of a good we consume, less satisfaction will
be added. As we buy more of something, our happiness increases in a decreasing
rate. The researchers have proved that the law of diminishing marginal utility
applies to most of the respondents. Of course, insights about this economic theory
depend on an individual and on the circumstances but on the average, the economic
theory is definitely relevant.
Average Budget Allocation
Using the formula
, where n = number of data items in the
sample space and x = sum of all data values, the researchers found out that the
average budget allocation in a month for Starbucks Frappuccino is
Using the same formula, the average weekly allowance is found to be
Php1157 and the monthly allowance is Php4628. Considering the average budget
allocation and the average monthly allowance, the portion of the allowance
allocated for Starbucks Frappuccino is 9.13%
Quantity Demanded
The respondents were asked how much Starbucks Frappuccino they would
consume given different prices. The average results were as follows:
48
Price
Table 6. Average
Php100
Php120
Php140
Php160
Php200
Average
Consump
tion
2.82
2.36
1.73
1.41
0.96
consumption of
Starbucks Frappuccino given different prices
As Table 6 shows, at the price of Php100 the respondents average

consumption would be around 2-3 tall-sized Starbucks Frappuccino or more
specifically, 2.82 cups. At the price of Php120 they would consume an average of
2.36 tall-sized Starbucks Frappuccino. At the price of Php140 they would consume
1-2 tall-sized Starbucks Frappuccino or more specifically, 1.73 cups. At the price
of Php160 they would consume 1.41 tall-sized Starbucks Frappuccino and at the
price of Php200 they would consume and average of 0.96 tall-sized Starbucks
Frappuccino.
The summary of the derivation of the above figure would be as follows:
Table 7. Regression Statistics of Quantity demanded for

Starbucks Frappuccino given different prices
49
This means that 95.1087% of the data fits the regression line and that
95.1087% of variance in the dependent variable (quantity demanded) can be
predicted from the independent variable (prices).
df
Regression
Residual
Total
3
4
Intercept
X Variable 1
Coefficient
s
4.563783
78
0.018804
1
Standard
Error
0.364511
52
0.002462
02
SS
2.0932672
97
0.1076527
03
2.20092
MS
2.093267
297
0.035884
234
F
58.33389
905
t Stat
P-value
Lower 95%
Upper 95%
12.52027
3
7.637663
2
0.001098
36
3.403745
43
0.026639
3
5.723822
14
0.010968
8
0.004660
33
Significan
ce F
0.0046603
26
Lower
95.0%
3.403745
43
0.026639
3
Upper
95.0%
5.723822
14
0.010968
8
Table 8. Analysis of Variance (ANOVA) of Quantity demanded for Starbucks Frappuccino
At 5% significance level the rule is that P-value is less than 0.05. As shown
in figure 3 above the significance level of F: 0.004660326 means that the whole
equation is highly significant. There is only 0.4% chance that all regression
parameters are zero.
Additionally, the P-values 0.001098 and 0.00466 are both less than 0.05
which means that the variables are highly significant. The negative coefficient of
the second variable indicates that there is a negative relationship between X and Y.
In this case, price and quantity demanded.
50
Base on the data processed, the demand equation for Starbucks
Frappuccino was derived:
Qd = 4.563783784 - 0.018804054X
Correlational Analysis
Correlation Matrix
Price is 100
Price is 120
Price is 140
Price is 160
Price is 200
Weekly
Allowance
Budget
Allocation
Colum
n1
1
0.9074
37
0.7643
91
0.4161
06
0.1885
88
0.2786
44
0.1481
57
Colum
n2
Colum
n3
Colum
n4
Colum
n5
Colum
n6
Colum
n7
1
0.8850
13
0.5608
3
0.3335
19
0.3138
76
0.2296
87
1
0.7381
29
0.5611
16
0.3068
11
0.2555
02
1
0.8081
65
0.2486
64
0.2188
93
1
0.0938
12
0.2310
55
1
0.2236
21
Table 9. The relationship of weekly allowance and budget allocation to the consumption given
different prices
51
Weekly allowance is positively correlated with the number of Starbucks
Frapuccino consumed. It has a correlation coefficient of 0.78644, 0.313876,
0.306811, 0.258664 and 0.093812 when the price is Php100, Php120, Php140,
Php160 and Php200 respectively. This means that when the weekly allowance
increases the number of Starbucks Frappuccino consumed will also increase for all
prices.
Budget allocation for Starbucks Frappuccino is positively correlated with
the number of units consumed. It has a correlation coefficient of 0.148157,
0.229687, 0.255502, 0.218893 and 0.231055 when the price is Php100, Php120
Php140, Php160 and Php200 respectively. This means that when budget allocation
for Starbucks Frapuccino increases the number of Starbucks Frapuccino consumed
will also increase for all prices.
52
CHAPTER VI
CONCLUSION AND RECOMMENDATION
Conclusion
Based on the data gathered from a thorough analysis and researches, the
following conclusions were drawn:
1. The researchers accepted the hypothesis that an increase in price has a
negative effect on quantity demanded. That is, as the price of Starbucks
Frappuccino increases, quantity demanded for that good decrease.
2. The researchers accepted the hypothesis that there is a negative relationship
between the number of cups consumed and the additional satisfaction
gained. The law of diminishing marginal utility applies in situations,
wherein continuous consumption of just a single good is involved. This
entails that goods obtained even if at no cost will not give same happiness
or satisfaction to the consumer as more of good is consumed.
3. The researchers accepted the hypothesis that there is a positive correlation
between consumption of Starbucks Frappuccino and weekly allowance as
well as budget allocation. It simply implies that when the budget allocation
and weekly allowance increases, the demand for Starbucks Frapuccino
increases.
53
Recommendation
The following recommendations are offered for the consumers of Starbucks
Frappuccino as well as the marketers of the product:
1. Given in this study is the average of the maximum budget allocation of the
respondents for Starbucks Frappuccino. With this, the marketers of the
product are recommended to conduct a price analysis so as to satisfy
consumer wants and/or needs as well as to maximize sales.
2. Consumers of Starbucks Frappuccino should efficiently allocate their
budgets given that marginal utility for the good is decreasing.
Recommendations for Improving this Study

1. It may be helpful to expand the scope of the study which may include
consumer preferences as well as indifference curves.
2. Online surveying may be an effective medium to gain more respondents but
may not be as reliable as conducted in person since not all respondents fully
understand the questions at once. With this, concerns are not all raised for
more accurate answers.
54
REFERENCES
Francis Y. Edgeworth. Mathematical Psychics: An Essay on the Application of
Mathematics to the Moral Sciences (New York: Augustus M. Kelley,
1967). p. 101. First Published 1881.
Economics Exposed. Theory of Consumer Behavior. Retrieved from http://
economics-exposed.com/theory-or-consumer-behaviour/
Coffee.org (2013). History of Starbucks. (Seattle, Washington). Retrieved from
http://www.coffee.org/history-of-starbucks
Starbucks Corporation. Our Company. Retrieved from http://www.starbucks.ca/
about- us/company-information
Joan Zielinski and Thomas S. Robertson (1982). Consumer Behavior Theory:
Excesses and Limitations. in NA - Advances in Consumer Research
Volume 09. eds. Andrew Mitchell, Ann Abor, MI: Association for
Consumer Research. Pages: 8-12.
Gugnani, Sarika (2008). Utility. Retrieved from http://economicsmicro.blogspot.
com/2008/11/utility.html
55
APPENDICES
56
UTILITY & BUDGET ALLOCATION OF DLSU-D STUDENTS
FOR STARBUCKS FRAPPUCCINO
Age:
Gender:
Residency :
Rural
Size of Household:
Number of Siblings:
Urban
Directions: Check your answer from the choices given. Otherwise, write it on
the spaces provided.
1. How would you rate from a scale of 0-5 (0 being the lowest, 5 being the
heighest) your additional satisfaction in a single day consumption on the nth unit of
Starbucks Frappuccino given below, if it is available at no cost?
0
st
1 cup
2nd cup
3th cup
4th cup
5th cup
6th cup
7th cup
8th cup
9th cup
10th cup
2. What will your weekly consumption of a tall-sized Starbucks Frappuccino be if
the price is:
0
Php100
Php200
Php300
Php400
Php500
57
3. How much is your weekly allowance? _____________________
4. Assuming your weekly allowance increased by P500, how many more units of
tall-sized Starbucks Frappuccino will you consume?
______________________________________
5. In a typical month, how much do you usually spend on Starbucks Frappuccino?
______________________________________
58
CURRICULUM VITAE
LOURENE V. BAUTISTA
Blk 38, Lot 5&7, Ph2, Windward Hills Subd., City of Dasmarias, Cavite
09057358409
lvb_lourene22@yahoo.com
Age: 18
Birth date: October 22, 1995
Citizenship: Fililpino
Father: Engr. Luis C. Bautista
Mother: Irene V. Bautista
Gender: Female
BirthPlace: Balayan, Batangas
Religion: Roman Catholic
Occupation: Civil Engineer
Occupation: Pharmacist
Educational Background
Level
School
Secondary
God The Almighty Academy, Inc.
Elementary
Angelita Zobel Elementary School
Year Graduated
2012
2008
Organization Involvement
Position
Organization
Board of Directors
Junior Philippine Institute of Accountants
Member
Accounting Enrichment Society
Honors and Awards Received
2nd Honors Deans Lister
Character Reference
Name
Loida R. Ilano
Cynthia A. Tiong
Year
2013 present
2013 present
2nd semester A.Y. 2012-2013
Office Address
City of Dasmarias, Cavite
City of Dasmarias, Cavite
Position
Faculty
Principal
59
CURRICULUM VITAE
PATRICK C. BERONA
333 Banaba Cerca, Indang, Cavite
09173255134
Kap.berona@ymail.com
Age: 18
Birth date: December 6, 1995
Father: Erwin Q. Berona
Mother: Estela C. Berona
Gender: Female
BirthPlace: Indang, Cavite
Occupation: Marine Engineer
Occupation: Housewife
Level
School
Secondary
Saint Gregory Academy
Elementary
Spirit Wings Learning Foundation
Year Graduated
2012
2008
Position
Organization
Year
Member
Junior Philippine Institute of Accountants 2013 present
Member
2013 present
Character Reference
Name
Office Address
Position
60
CURRICULUM VITAE
CAMILLE ANNE R. LONTOC
Blk 11, Lot 2 Barcelona St. Summer Meadows Salitran III Dasmarias City, Cavite
09151593334
Carlcamilleanne717@gmail.com
Age: 18
Birth date: May 24, 1995
Father: Atty. Carlos C. Lontoc
Mother: Edna M. Ramos
Gender: Female
BirthPlace: Pasay City
Occupation: Lawyer
Occupation: Businesswoman
Level
School
Secondary
St. Jude College Dasmarias
Elementary
Divine College
Position
Organization
Auditor
Great Thinkers Society
Choir Member
Campus Peer Ministry
Member
Year Graduated
2012
2008
Year
2013 present
2012 present
2013 present
Honors and Awards Received

1st Honors Deans Lister
Character Reference
Name
Susan R. Jose
Thelma R. Mesina
1st semester A.Y. 2012-2013
Office Address
Quezon City, PH
Quezon City, PH
Position
Manager
Asst. Manager
61
CURRICULUM VITAE
MIKEE ABIGAIL P. VILLALUNA
#19 Rose St. Villa Luisa Homes Phase 2, San Agustin 3, City of Dasmarias,
Cavite
09163748801
mikeevillaluna@yahoo.com
Age: 17
Birth date: May 8,1996
Father: Roy M. Villaluna
Mother: Mariles P. Villaluna
Gender: Female
BirthPlace: City of Dasmarias, Cavite
Occupation: Civil Engineer
Occupation: Cosmetics and Apparel Dealer
Level
School
Secondary
Congressional National High School
Elementary
Holy Child Jesus Montessori
Year Graduated
2012
2008
Position
Organization
Year
Member
Junior Philippine Institute of Accountants 2012 present
Member
2013 present
Character Reference
Name
Office Address
Position

Term Paper (Final)

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Term Paper (Final)

Uploaded by

Copyright:

Available Formats

De La Salle UniversityDasmarias

A Term Paper Presented to

February 17, 2014

Review of Related Literature ... 8

Background of the Study

Statement of the Problem

Objectives of the Study

To determine DLSU-D students total utility from consuming Starbucks

consuming Starbucks Frappuccino

Hypotheses of the Study

This study is not limited to only

determining the average budget allocation of DLSU-D students for Starbucks

The Utility Theory of Demand

Figure 1. Total Utility and Marginal Utility Curves

The Budget Constraint

Applying the Marginal Decision Rule

). If the marginal utility of good X is 1 and its price is

$2, then an extra $1 spent on X buys 0.5 additional units of utility (

The marginal benefit of shifting $1 from good Y to the consumption of

Equation 1.3 states the utility-maximizing condition: Utility is maximized

The Problem of Divisibility

Indifference Preference Theory

coffeehouse company in the world, with 20,891 stores in 62 countries, including

Why has Starbucks customer satisfaction scores declined?

Has the companys service declined or is it simply measuring satisfaction the

What would it take to ensure that this customer is highly satisfied?

Figure 2. Conceptual Framework for the Utility and Budget Allocation of

The conceptual framework presented depicts the effect of the independent

Age of the Respondents

Age (in years)

Figure 4. Gender of the respondents

Figure 5.Residency of the respondents, whether urban or rural

Table 1. Descriptive statistics of the respondents demographic profile

Table 3. Number of respondents in a given unit and rate of satisfaction

Nth unit of Starbucks Frappuccino

2 out of 100 DLSU-D students obtain a zero satisfaction while 55 of

Figure 9. Decreasing satisfaction as consumption increases in a single day

Table 4. Number of respondents in a given 0% and 100% satisfaction

Dasmarias City, Cavite

Units of Starbucks Frappuccino

Units of Starbucks Frappuccino

Average Budget Allocation

Using the formula

, where n = number of data items in the

Starbucks Frappuccino given different prices

As Table 6 shows, at the price of Php100 the respondents average

Table 7. Regression Statistics of Quantity demanded for

Table 8. Analysis of Variance (ANOVA) of Quantity demanded for Starbucks Frappuccino

Recommendations for Improving this Study

2nd semester A.Y. 2012-2013

Honors and Awards Received

1st semester A.Y. 2012-2013

You might also like