Theory of Consumer Behaviour

Concept of Utility

Introduction Existence of human wants forms the basis of all economic activities. Want refers to an effective desire for a particular commodity by a human being who gets satisfied after making an effort to acquire it. The characteristics of wants are: Wants are multiple and multiply with time Wan .... Read More

Law of Diminishing Marginal Utility

Introduction The law of diminishing Marginal utility was initially formulated by a German economist H.H. Gossen. It was later systematically formulated by Alfred Marshall. The law of diminishing marginal utility states that as more and more units of a commodity are consumed, marginal utility d .... Read More

Utility Analysis

Introduction Utility refers to the want satisfying power of a commodity. The main concepts of utility are marginal utility and total utility. Consumer’s equilibrium refers to the level of consumption where the consumer gets maximum level of satisfaction from consumption of the good with his giv .... Read More

Indifference Curve Analysis

Introduction The history of indifference curve(IC) can be traced backed to 1881, when Edgeworth had originally invented the indifference curve which was later on fully developed by British economist J.R. Hicks and R.G.D. Allen. An Indifference curve shows different combinations of two goods for whi .... Read More