Household behavior and consumer choice

Household Behavior and Consumer Choice

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 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 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 . Thus , the prevailing consumer theory in economics posits that the essential conceptual basis for decision making inferred from rational behavior is the maximization of the production of one 's own utility (since utility is relevant or subjective ) within the constraints of income and price...