Overview
Consumer theory provides a framework for understanding how individuals make choices about spending their resources. It emphasizes the importance of utility, budget constraints, and preferences in shaping consumer behavior. By analyzing these factors, we can better understand the decisions consumers ...
Key Terms
Example: Higher utility is achieved when a consumer enjoys a meal.
Example: A budget constraint may limit a consumer to buying either a laptop or a smartphone.
Example: An indifference curve might show combinations of apples and oranges that yield equal satisfaction.
Example: Behavioral economics explains why people might save less for retirement than they should.
Example: Choosing a familiar brand over an unknown one is a heuristic.
Example: Placing healthy foods at eye level in a cafeteria is a nudge towards better eating.