consumer behavior

Question 1

the theory of consumer behavior

Answer 1

the explanation of how consumers allocate incomes to the purchase of different goods & services.

Question 2

Rational choice theory

Answer 2

states that individuals use rational calculations to make rational choices & achieve outcomes that are aligned with their own personal objectives.

(self-control, unmoved by emotions 7 external factors)

Question 3

behavioral economics

Answer 3

is the study of psychology that explains that humans are not rational & are incapable of making good decisions

Question 4

what is a market (or bundle)

Answer 4

A list with specific quantities of one or more goods to choose from in the market.

Question 5

Marginal rate of substitution

Answer 5

maximum amount of a good that a consumer is WILLING to give up in order to obtain one additional unit of another good.

Question 6

Diminishing marginal rate of substitution

-when the MRS diminishes along an IC, the curve is _____

Answer 6

As the satisfaction level rises the consumer is less willing to exchange a good in order to obtain one additional unit of another good.

convex