The Consumer

Behavior

Name: Ocampo, Abegail O. Date: September 16, 2019

Professor R.G. Tiambeng Sec. & Time: BSA-A2 1:00pm-4:00pm
 The discussion of consumers’ behavior will involve constructing a model that represents the
choices made by individuals such as indifference curve, marginal concepts, consumers’
equilibrium, income consumption curve, Engel curve and price consumption curve. These will
give us the maximum satisfaction subject to an income restriction.

The theory of consumer choice does not require us to assign a numerical value to the
level of satisfaction that a consumer receives from consuming a good or service, it is useful to
attach a number to this satisfaction level that we call utility. When the consumption of a good is
increasing, the total utility is increasing while the marginal utility is decreasing.  
The law of diminishing marginal utility talks about the more you consume a good or use a
service, the less satisfied you will be with each successive use or consumption. Consumer
equilibrium Allows a consumer to obtain the most satisfaction possible from their income while
Utility talks about How much benefit or satisfaction or value do you get, out of getting a good
and service. Marginal Utility is the change in the utility from an increase in the consumption of
the good or service. It is measured with absolute number of utilities or satisfaction unit. Marginal
Benefit, conceptually, they are the same as Marginal Utility. Indifference curve is a graph
showing combination equal of two goods that give the consumer equal satisfaction and utility.
There are two examples of indifference curve, the perfect substitute and the complementary
substitute. Budget line provides all the possible combinations of two sets of goods, given normal
income and prices for both goods, denoting a limit on the expenditure. Budget constraints all
possible combinations of goods and services that can be attained given current prices and
limited income. And lastly, Engel Curve it is a curve connecting the points that shows the
different quantities of the item purchased at different levels of income. It was named after
a German statistician, Ernest Engels. An engel curve of various products is even when
an increase in income does not have effect on the quantity of goods demanded.

The study of consumer behavior is concerned not only with what consumers buy,
but also with why they buy it, when, where and how they buy it and how often they buy
it. Consumer behavior is an integral part of strategic market planning. Consumer
behavior is the study of how individuals make decisions to spend their available
resources (time, effort, money) on consumption-related items.