Consumer Behaviour
1️⃣ Meaning of Consumer Behaviour
Consumer behaviour refers to how and why consumers make decisions about what to buy,
how much to buy, and when to buy products or services.
It studies the decision-making process of consumers.
2️⃣ Utility Concept
Utility means the satisfaction a consumer gets from consuming a product.
There are two types of utility:
● Total Utility (TU):
Total satisfaction received from consuming a given quantity of goods.
● Marginal Utility (MU):
The additional satisfaction gained from consuming one more unit of a good.
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Formula:
MU = Change in TU / Change in Quantity
3️⃣ Law of Diminishing Marginal Utility (DMU)
According to this law:
➡️ As a consumer consumes more units of the same good, the additional satisfaction
(MU) decreases.
Example:
1st slice of pizza = very high satisfaction
2nd slice = less satisfaction
5th slice = very low or zero satisfaction
4️⃣ Consumer Equilibrium
1️⃣ Meaning of Consumer Behaviour
Consumer behaviour refers to how and why consumers make decisions about what to buy,
how much to buy, and when to buy products or services.
It studies the decision-making process of consumers.
2️⃣ Utility Concept
Utility means the satisfaction a consumer gets from consuming a product.
There are two types of utility:
● Total Utility (TU):
Total satisfaction received from consuming a given quantity of goods.
● Marginal Utility (MU):
The additional satisfaction gained from consuming one more unit of a good.
👉
Formula:
MU = Change in TU / Change in Quantity
3️⃣ Law of Diminishing Marginal Utility (DMU)
According to this law:
➡️ As a consumer consumes more units of the same good, the additional satisfaction
(MU) decreases.
Example:
1st slice of pizza = very high satisfaction
2nd slice = less satisfaction
5th slice = very low or zero satisfaction
4️⃣ Consumer Equilibrium
