Consumer's behaviorLearning objectives:
- What do you mean by utility? Explain different concepts of utility.
- Discuss the relationship between total utility and marginal utility.
- Explain the law of diminishing margin utility and the law of equi-marginal utility with the help of schedule and diagram.
- Explain the equilibrium of consumer in terms of utility analysis.
A consumer is a man who consumes goods and services to satisfy his wants. Each consumer has to face the problems of unlimited wants and limited resources. In such state of affairs it is the desire of each consumer to maximize his satisfaction in the presence of limited income. Whenever a consumer maximizes his level of satisfaction, he is satisfied with is spending pattern. Then he is said to be in equilibrium condition. This pattern of spending income and getting possible maximum level of satisfaction is known as consumer's behavior. There are two main approaches to describe consumer's equilibrium. These are cardinal approach and ordinal approach. Both the approaches are discussed here.