lesson 5 Flashcards
the one who demands goods and services
consumer
king of producers
consumers
goods that yield satisfaction directly to any consumer and are sold for consumption and not to be used for further processing of another good
consumer goods
basic needs for sustaining human life
physiological needs
needs to achieve safety feeling. it can be in the form of house, money, or security
safety needs
need for belongingness, love, care, and acceptance
social needs
need for recognition. sometimes we satisfy it by having control or power with the things we are good at
esteem needs
need for growth or improvement. it answers the questions of what we are capable of becoming
self-actualization needs
3 steps in studying consumer behavior
consumer preferences
budget constraints
consumer choices
describe how and why people prefer one good to another
consumer preferences
this means that people have limited income
budget constraints
combination of consumer preferences and budget constraints. it answers the question of what combination of goods or services will consumers buy to achieve their satisfaction while at the same time maximizing their limited budget
consumer choices
refers to the satisfaction or pleasure that an individual/consumer gets from consuming a good/service. consumers’ willingness to pay for goods or services, whatever its price
utility theory
defined as the additional satisfaction that an individual derives from consuming an extra unit of goods/services
marginal utility
total satisfaction that a consumer derives from the consumption of goods/services
total utility
as the consumer gets more satisfaction in the long run, he experiences a decline in satisfaction. As more and more units of products/goods are consumed, every additional unit gives satisfaction with a
diminishing rate.
law of diminishing marginal utility
showing no bias/neutra. to explain it more, different combinations of goods and services give the same level of satisfaction to the consumer
indifference curve
consumption possibility line. indicates the various combinations of two products which can be purchased by the consumer with his income, given the prices of the products
budget line
