Chapter- 6 Theory of Consumer: Consumer Behaviour Introduction: is determined by of other Demand many factors (own price, consumers’ income, prices commodities, tastes, income distribution, total population, wealth, consumers’ consumers’ credit availability, government policy, past level of demand, and past level of income, etc) simultaneously. The traditional theory of demand examines only the final demand for durables consumers’ It does not deal with the demand for investment goods, nor with the and non- durables. demand for intermediate products. includes and Total demand final demand intermediate demand. is subdivided into and Final demand demand demand for investment goods. consumers’ Traditional theory of demand deals only with which is only a fraction demand, consumers’ of the total demand in the economy as a whole. Meaning of Utility and Marginal Utility: Utility: Utility means want satisfying power of a commodity. Types of utility: Total utility and marginal utility Total utility: The sum of total satisfaction which a consumer receives by consuming various units of the same commodity. Marginal Utility: It refers as utility of every additional unit of the consumed or it can be can be defined as a change in total utility resulting from a one unit change in the consumption of a commodity at particular point of time. Total utility is the sum of marginal utility. MUn = TUn TUn-1 –
Chapter- 6 Theory of Consumer: Consumer Behaviour Introduction: Demand is determined by many factors (own price, consumers’ income, prices of other commodities, consumers’ tastes, income distribution, total population, consumers’ wealth, credit availability, government policy, past level of demand, and past level of income, etc) simultaneously. The traditional theory of demand examines only the final consumers’ demand for durables and non- durables. It does not deal with the demand for investment goods, nor with the demand for intermediate products. Total demand includes final demand and intermediate demand. Final demand is subdivided into consumers’ demand and demand for investment goods. Traditional theory of demand deals only with consumers’ demand, which is only a fraction of the total demand in the economy as a whole. Meaning of Utility and Marginal Utility: Utility: Utility means want satisfying power of a commodity. Types of utility: Total utility and marginal utility Total utility: The sum of total satisfaction which a consumer receives by consuming various units of the same commodity. Marginal Utility: It refers as utility of every additional unit of the consumed or it can be can be defined as a change in total utility resulting from a one unit change in the consumption of a commodity at particular point of time. Total utility is the sum of marginal utility. MUn = TUn – TUn-1
6._consumers_behaviour.docx