Consumer Behaviour and utility analysis

Consumer Behaviour: Wants are unlimited but to satisfy them are limited here the consumer thinks where to allocate and where not

                                                (or)

In simple terms consumer behaviour is how the consumer behaves

Eg: if he has 500 rs he has so many things to buy how he behaves with 500 rs is called consumer behaviour

Again consumer behaviour has two approaches

Ø  Cardinal Approach

Ø  Ordinal Approach

Utility: Satisfying power is called utility (or) quality to satisfy human wants is called utility

Here utility is not equal to usefulness

Eg: If you ask a addicted smoker how will you get satisfied by smoking. He will tell you first smoke you will get to know how it satisfies. In this case he is getting sense of happiness by smoking, but here cigarette is not useful.

Ø  Utility varies from person to person and time to time.

Cardinal Approach:

Ø  It was given by Alfred marshal

Ø  Satisfaction can be measured in terms of  numbers

Ø  Not realistic

Ø  One good at a time

Ø  It is a quantitative measure

Eg: if a consumer consume apple he can tell that he got 20 utils by eating an apple

Utils: To measure the satisfaction is called util

Ordinal Approach:

Ø  It was given by Hicks and Allen

Ø  Satisfaction cannot be measured in terms of numbers but he can state the ranks

Ø  Utility is qualitative

Ø  Combination of goods

Ø  More realistic

Eg: If he takes an ice cream and an apple he can state the rank in which he is getting more satisfaction from it like first rank for ice cream and second rank for an apple.