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Tocb - Me

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Carlo Daniel
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3 views

Tocb - Me

Uploaded by

Carlo Daniel
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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THEORY OF

CONSUMER
BEHAVIOUR
BASIC MICROECONOMICS

Prepared by:
Mr. Carlo R.
Daniel, LPT
LEARNING
OBJECTIVES:
• Explain the concept of utility and the basic
assumptions underlying consumer
preferences.
• Explain the equilibrium condition for an
individual consumer to be maximizing utility
subject to a budget constraint.
• Use indifference curves to derive a demand
curve for an individual consumer.
• Identify the substitution, income, and total
effects of a change in the price of a good.
• Explain why demand curves are downward
sloping.
theory of
consumer
behaviour
1. How consumer
buys different
“ Choices lies on
goods at different
what do we want
prices.
and what can we
2. How a consumer
afford…”
allocates income to
UTILITY
Level of satisfaction is measured as utility and the unit
of satisfaction is called utils.
TWO METHODS OF
UTILITY CARDINAL
ORDINAL
METHOD
METHOD
• DIMINISHI • BUDGET
NG LINE AND
MARGINAL INDIFFERE
UTILITY NCE
CURVE
TWO METHODS OF
UTILITY
ORDINAL CARDINAL
METHOD METHOD
Ordinal method is done Cardinal method is the
when an individual process in which
ranks the utility for individual give the
commodity. intensity of utils he
For example, Andrew
derive in 1 unit of
ranks apple, orange
goods. In above
and mango according to
example, Andrew may
level of satisfaction he
rate apple as 7 utils
MARGINAL UTILITY
HOW CONSUMER SPENDS HIS INCOME ON GOODS TO
GET HISANALYSIS
MAXIMUM SATISFACTION
MARGINAL UTILITY
HOW CONSUMER SPENDS HIS INCOME ON GOODS TO
GET HISANALYSIS
MAXIMUM SATISFACTION

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THANK
YOU

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