Consumer Behavior

Customers use many products that give them pleasure or satisfaction. Utility refers to the measure of satisfaction or well-being that a consumer derives …

Consider a girl riding her motorcycle under the hot sun, feeling thirsty. Spotting a gas station, she buys a bottle of water. This first bottle of water …

Total utility, or TU, is the overall satisfaction with the consumption of all units of a product. Consider the utility that John gets from eating pizzas …

Consumer preferences are based on a few assumptions that help simplify consumer behavior. A market basket or a bundle refers to a combination of goods and …

The study of consumer behavior is based on a few assumptions regarding consumer preferences. The assumption of transitivity means that a customer's …

An indifference curve is a graphical representation of a consumer's preferences. A consumer is indifferent among different combinations of two …

Nancy loves coffee and sandwiches. Her preferences for various combinations of coffee and sandwiches consumed weekly are represented in IC1. It gives her …

Suppose indifference curve IC1 represents John's preferences for weekly consumption of goods X and Y. Now imagine another indifference curve IC2, …

The marginal rate of substitution, or MRS, is the rate at which a consumer is ready to give up one product in exchange for another while maintaining the …