THEORY OF CONSUMERS BEHAVIOR

Question 1

It is the approached of maximization of satisfaction

Answer 1

Utility approach and Indifference Curve / Budget Line

Question 2

3 Basic determinants of individuals demand for a product

Answer 2

1. Income
2. Population
3. Taste and Preference

Question 3

Preference are the ranking of bundles of consumers goods in order of desirability, Consumers preferences are independent of income and prices

Answer 3

Consumers Behavior

Question 4

Satisfaction of pleasure , The satisfaction or reward a product of yields related to ita alternatives, The basis of choice

Answer 4

Utility

Question 5

3 characteristics of utility:

Answer 5

1 “Utility and Usefulness” are not synonyms
2 Utility is subjective
3 Utility is difficult to quantify

Question 6

2 certain problems implicit in the concept of utility

Answer 6

• impossible to measure utility accurately and completely
• impossible to compare utilities of different people

Question 7

Believes the utility can be measured numerically

Answer 7

Cardinal Utility

Question 8

Believes that utility can be ranked or compared

Answer 8

Ordinal Utility

Question 9

An imaginary unit to measure satisfaction

Unit of satisfaction

Answer 9

Utils

Question 10

• is the extra satisfaction consumer realizes from an additional unit of a product.
• the additional satisfaction gained by the
  consumption or use of one more unit of something.

Answer 10

Marginal Utility

Question 11

The total amount of satisfaction or pleasure a person derives from consuming some specific quantity.

Total of all the marginal utilities

Answer 11

Total Utility

Question 12

• Added satisfaction diminishes
  as consumer acquires
  additional unit of a given
  product.
• Point of saturation

Answer 12

Law of diminishing marginal utility