Understanding the Behaviour of consumer & Producer

Consumer Behaviour:
When people make a decision to buy or not to buy any product is called consumer behaviour.

• Tastes and preferences are fixed and given,and plays a large role in decesion making.
• Cardinal Utility will always measure in utils.(it can be quantified)
• Ordinal utility are measured in rank.

Producer Behaviour:

We can say that when producer take an attempt to maximize his profits it is producer behaviour.

Profit= Revenue - Total cost.

Diffrence between Short Run & Long run:

Short run is a period of time in which one or more factors if production.

Long run refers to a period where all inputs are visible.

Utility Characteristic:

• Ever consumers have different tastes and preferences in which rate of marginal utility diminishes depend upon.

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• Principle of diminishing marginal utility,the more of the good that contain in a specified peyof time,the less the additional utility derives from the additional units of goods.

Shorter the time period<---->faster the marginal utility decreases.

Eg:-

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