Questions On Consumer 's Behavior

1. The first chapter in the book is about the market and its inner workings. The book briefly explains the idea of supply and demand, in which the price of a certain good or service will reach the point where all the demand is equivalent to the supply. However, the value of something is not determined by its necessity, but its desire within society, as seen by the difference in cost between a diamond and life giving water. Markets operate as they do because people try to maximize the amount of utility for themselves. Nevertheless, a strict rationalism model cannot be used for predicting all the occurrences of a market because of the ever changing behavior of people; thus economists must take precautions against

How will a consumer decide whether to purchase a good? When a consumer purchases a good, what does this reveal?

First, we assume that all of these entities have unlimited wants. This assumption forms the basis of economics. It is the study of how entities try to fulfill these unlimited wants when confronted with limited resources. Second, we assume that all of these entities are rational actors. We assume that they typically act in ways that will help to achieve their goals. This allows us to understand their actions which we would not be able to do if we assumed that they constantly acted on the basis of whims.

The government cannot detect consumer preferences, shortages, and surpluses accurately and cannot efficiently co-ordinate production. Economists Ludwig von Mises and Friedrich Hayek have both referred to this as the “economic calculation problem.” Market system and a free economy are used to solve this problem. Some economists say Adam Smith best describes the principle of supply and demand in his book Wealth of Nations, "When the quantity of any commodity which is brought to market falls short of the effectual demand, all those who are willing to pay... cannot be supplied with the quantity which they want... Some of them will be willing to give more. A competition will begin among them,

Keywords: Economic theory, Demand, Supply, Consumer Preferences, Poverty and low income, heterogeneity and homogeneity food

which lead  to  the decline  in sales for isnack 2.0. The lack of connection with consumers

Consumers use cost-benefit analysis in order to maximize utility. They do this when they are faced with a decision to make. They list the costs of the product, make a list of pros and cons for the product, and they compare costs and benefits to other locations that have this good and see which is larger. Consumers make different decisions when using this process because some goods have a larger pros list than cons and vice versa.

In other words most people would prefer to pay more and buy a more expensive product thinking that by paying more it is also superior to the other products of the same category that are cheaper. However, although the phrase “you get what you pay for” might have some validity in it that is not always the case, due to the fact that sometimes the products that might be cheaper are just as good as the competitor brand which has a higher price. In this instant it would be logical to buy the cheaper product however most human beings would opt for the expensive product, assuming that it is of better quality than the cheaper product. On the other hand, Dan Ariely rebuffs this claim and states, “We choose what we like, not what's best.” Sometimes humans don’t make decisions based on their preferences; instead they choose what they want and that leads to a process of rationalisation in order to get what they really want. However, they still want to give the impression that they were acting according to their preferences.

The other aspect is that needs vary depending on what country you live in. "For example a consumer in the United States may need food but may want a hamburger, french fries and a soft drink and a person that lives in Mauritius that needs food

Every person is a consumer in some way or another. Maybe it’s fuel for the automobile that is used to reach work, or maybe it is electronics such as iPad, mobile phone, or any other good or service. Prior to making most any purchase, individuals have to make a decision by doing some type of cost/benefit analysis. For example, just buying a loaf of bread can be difficult as there are so many choices of brands, types, and prices. Depending on what you will use the bread to hold, a hot-dog bun maybe the right choice, but then a decision has to be made if it is to be white or wheat. Wheat may taste better, but is it worth the dollar price difference? Another example would be using an internet site such as Angie’s List to search, select and schedule a service.

Understanding the fundamental concepts of economics allows us to analyze laws that have a direct bearing on the economy. These laws and theories are essentially the backbone of how economics is used and studied. The law of demand can be expressed by stating that as long as all other factors remain constant, as prices rise, the quantity of demand for that product falls. Conversely, as the price falls, the quantity of demand for that product rises (Colander, 2006, p 91). Price is the tool used that controls how much consumers want based on how much they demand. At any given price a certain quantity of a product is demanded by consumers. As the price decreases, the quantity of the products demanded will increase. This indicates that more individuals demand the good or service as the price is lowered. This can be illustrated using the demand curve. The demand curve is a downward sloping line that illustrates the inversely related relationship of price and quantity demanded.

When a consumer chooses the combination of goods and services to buy, what is she or he trying to achieve?

In the modern economic system presented in the world today, microeconomics, and the study of such, is a vital part of the budding economic scholar. In most circumstances, microeconomics is based on the cumulative study of how individuals and firms, or a combination of the two, make decisions regarding the allocation of resources, typically in markets where goods and services are bought and sold. This allocation, or optimization of limited funds through distribution, usually follows 2 standardized theories: the Consumer and Producer. Consumers usually choose to maximize their available preference in the market, with a limited income value or time aspect. This is evident in the world economy, with consumers always being fiscally motivated

There is just something intriguing about how consumers think and how they decide whether to make certain purchases or not. A lot of this has to do with the way businesses market their products to buyers. There are some psychological aspects to why consumers behave the way that they do. These buyers can be swayed by factors such as the environment around them, their feeling about particular brands, how the products are advertised, key words, and the level of knowledge and understanding they possess.

Once there is the decision to consume or purchase good s or services the common factor then becomes the need for that product which is at times evaluated based on attainability and price. In many situations if consumers are not motivated by the need to purchase then the possibility lies that they will not purchase. There may be different justifications that consumers internalize when making the decision to purchase a particular product at its given price. Different decisions supports the need to purchase a product such as