This company deals with the products that are sold rapidly, and at lower price than the outside market.
Get Full Essay Get access to this section to get all help you need with your essay and educational issues. Get Access Household Behavior and Consumer Choice Essay Sample With the current global financial epidemic plaguing national economies that continuously threaten the viability and survival of many businesses, consultants are shifting attention on understanding the economics of consumer behavior to help align the marketing initiatives of companies in order to keep their products and services responsive to the market and help companies stay afloat in the midst of the crisis.
Because the current crisis emanated and affected consumers as individuals, focus is placed on the role that households play and the nature of its demand in the flow of supply and demand in order for businesses to attain the equilibrium of price and quantity.
Price and income are the two factors affecting purchases of household. Price is inversely related to household purchases. If prices fall, consumers buy more and vice versa.
Income is directly related to purchases. If incomes rise, consumers buy more and vice versa. Budget constraint is the interplay between the capacity to buy and the price of the commodity. However, another important element to consider in purchases is the desire to buy.
Considering all these factors is the basis of choice which is utility or the satisfaction a service or product generates from a list of options. Foxall,p Marginal utility is the additional satisfaction obtained in purchasing additional units of the same product or service.
Marginal utility or satisfaction decreases for every purchase of additional product or service. For instance, the satisfaction of hunger decreases for every additional cheeseburger one eats hence, the desire to buy another cheeseburger decreases.
In order to maximize utility, companies usually offer discounts for the second purchase or serving of the product to minimize expenditure so the price offsets the loss in marginal utility. Changes in price affect households in terms of income and substitution.
The former pertains to decision to consume more or less because of increase or decrease in purchasing power while the latter refers to decision to consumer more or less of a good because of opportunity costs from another higher or lesser priced good.
With the current financial crisis for instance, many people lost their jobs and have restricted if not eliminated their expenditures for unnecessary items like relaxations and vacations that affected the hospitality industry.
This is the income effect because of decrease purchasing power. Instead of going to restaurants, people prepare lunches or buy packaged food to take to work. This is the substitute effect of preparing lunches, which is cheaper than going to restaurants.
The price of leisure is involved in the nature and choice that a household contributes and makes on input markets which includes the decision to work or not, the type of work and how much effort to put in the work, which is influenced by factors such as job availability, prevailing salary rates as well as the skill that the household can offer.The theory of consumer and choice is the branch of microeconomics that relates preferences to consumption expenditures and to consumer demand regardbouddhiste.com analyzes how consumers maximize the desirability of their consumption as measured by their preferences subject to limitations on their expenditures, by maximizing utility subject to .
Family economics applies basic economic concepts such as production, division of labor, distribution, and decision making to the study of the family. Using economic analysis it tries to explain outcomes unique to family—such as marriage, the decision to have children, fertility, polygamy, time devoted to domestic production, and dowry payments.
In this essay, we investigate the demand for ready-to-eat breakfast cereals in the U.S. using censored, household-level purchase data matched with product-level nutrition data. Decision-making.
In many cases, the consumer decision-maker is the person that ultimately buys the product. For example, the mother of a family may decide to buy a new sandbox for the children, so. What is middle class about the middle classes around the world? Abhijit V. Banerjee and Esther Duflo1 December encouraging us to write this essay and the editors of Journal of Economic Perspectives for detailed (e.g.
poverty level) and as data sets for studies of household behavior (Deaton (), Glewwe and Grosh ()). Similar to TPB, which theorizes consumer behavior based on rational evaluations of the consequences, rational choice theory asserts benefits and utility maximization as the basis of human behavior.