But economists also believe that the choices people make are influenced by their incomes, by the prices of goods and services they consume, and by factors like where they live. This chapter introduces the economic theory of how consumers make choices about what to buy, how much to work, and how much to save.
What do you mean by consumer choice?
Consumer choice refers to the decisions that consumers make with regard to products and services. When we study consumer choice behavior, we examine how consumers decide which products to purchase or consume over time.
What is consumer decision making?
Consumer Decision Making refers to the process under which consumers go through in deciding what to purchase, including problem recognition, information searching, evaluation of alternatives, making the decision and post-purchase evaluation.
What are some influences on consumer choices?
The personal factors include age, occupation, lifestyle, social and economic status and the gender of the consumer. These factors can individually or collectively affect the buying decisions of the consumers.
What are the three important buying principles?
In this section, you’ll learn about three basic buying princi- ples that can help you and all consumers achieve this goal. They are: (1) gathering information; (2) using advertising wisely; and (3) comparison shopping.
What is optimal choice of consumer?
The optimal choice from a combination of goods is attained when all income is spent, and the consumer is on the highest attainable indifference curve. In other words, the optimal choice is attained when the budget line is tangent to the indifference curve. Changes to Price.
How do consumer choices affect the economy?
Even a small downturn in consumer spending damages the economy. As it drops off, economic growth slows. Prices drop, creating deflation. If slow consumer spending continues, the economy contracts.
What are the four influences on consumer choices?
In general, there are four factors that influence consumer behaviour. These factors impact whether or not your target customer buys your product. They are cultural, social, personal and psychological.
What are 3 decisions consumers have to make?
Three decisions consumers have to make: To buy the item, if you need the item, if you’ll use trade offs. How do economists define rational choice? The alternative that has the greatest perceived value.
What are the 5 consumer rights?
Consumers are protected by the Consumer Bill of Rights. The bill states that consumers have the right to be informed, the right to choose, the right to safety, the right to be heard, the right to have problems corrected, the right to consumer education, and the right to service.
How do price changes affect consumer choices?
The typical response to higher prices is that a person chooses to consume less of the product with the higher price. The substitution effect occurs when a price changes and consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price.