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Discuss the Theory of Consumer Behavior

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The traditional theory of demand starts with the examination of the behavior of the behavior of the consumer, since the market demand is assumed to be the summation of the individual consumer demands. Therefore we will first start by deriving the demand curve of individual consumers.
The consumer is assumed to be rational, given his income and market prices of the various commodities; he plans the spending of his income so as to attain the highest possible level of satisfaction or Utility. This is the Axiom of Utility Maximization. It is assumed that the consumer has full knowledge of all the information relevant to his decision making i.e. complete knowledge of all available commodities, their prices and his income. In order to attain this objective the consumer must be able to compare the utility (satisfaction) of the various baskets of the goods, which he can buy with his income.

Wilfykil answered the question on March 20, 2019 at 07:13

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