Objectives of Consumer Theory
Consumer Theory is the study of how people make decisions when it comes to spending their money, and is a branch of economics that examines the behavior of individuals or households when it comes to consumption. The primary objective of Consumer Theory is to determine the best way for consumers to make decisions in order to maximize their wellbeing or utility. Consumer Theory looks at how rational individuals can make decisions to maximize their utility by weighing up the costs and benefits of different options.
Economic Utility
Economic utility is an economic concept that refers to the satisfaction or benefit an individual receives from a product or service. Utility is subjective, meaning that it is based on an individual’s opinion or preference. The concept of economic utility is used by economists to measure the satisfaction or benefit that an individual receives from consuming a product or service.
Marginal Utility
Marginal utility is the additional satisfaction or benefit a consumer derives from consuming one additional unit of a good or service. It is used to measure how much satisfaction or benefit a consumer receives from consuming an additional unit of a good or service. The concept of marginal utility is used by economists to measure how much additional satisfaction or benefit a consumer derives from consuming an additional unit of a good or service.
Consumer Choice
Consumer choice is the process by which consumers make decisions about what goods and services to purchase. Consumers must weigh up the costs and benefits of different options in order to make an informed decision about what to buy. The concept of consumer choice is used to explain how rational individuals make decisions about what to purchase in order to maximize their utility.
Related Questions
- What is consumer theory?
- What is the purpose of consumer theory?
- What is economic utility?
- What is marginal utility?
- What is consumer choice?
- What is the difference between economic utility and marginal utility?
- How do consumers make decisions?
- How can consumer theory help businesses?
- What are the principles of consumer theory?
- What is the law of diminishing marginal utility?