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Such a great experience with OZ Assignment experts. As it is a demanding subject, you must, without thinking twice, take Consumer Behaviour Homework Help from our experts. Our experts say that consumer behaviour mainly aims at finding out why, where and how the consumer responds towards a particular product and in what manner.
It is difficult to determine the psychology of the consumers as it keeps changing as per various situations. There are various alternatives available to the consumers these days, and therefore the companies keep changing the features of their products as required by the consumers or else these companies will start losing their loyal customers.
This switching over of consumers to other products will result in low sales figure. Some of the factors that determine consumer behaviour are as follows:. Consumer behaviour differs from each other depending on the age group in which the consumer falls.
For example, the consumers in the age group of twenty to thirty will have different preferences than those in the age group of forty to fifty.
Following are the main applications of consumer behaviour:. Consumer behaviour assignment help team has years of experience and therefore can guide you properly in this subject. These are listed as follows:.
Completeness — Preferences are by default considered to be complete. This means consumers can compare all market baskets and arrange them in order of their preferences.
Either a consumer will prefer C over D, or will prefer D over C, or may remain indifferent between the two. When we are talking here about completeness, we are not including the cost factor. Transitivity — This assumption can be understood by an example, where a consumer prefers basket B over basket C, and basket C over basket D, then the consumer will prefer basket B over basket C. Transitivity is believed to be a mandatory assumption to analyze consumer consistency.
More is satisfactory than less — Most of the articles that make up the industry are believed to be desirable. Consider an example of clothing, where a consumer first purchases the clothes, then go on for matching foot wear, even matching accessories.
So, practically there is no end to the desires. The more is always what consumers want. The above three assumptions form the fundamentals of the consumer paragon. They rationalize the things and arrange the consumer behavior logically. Having these assumptions with us, we will now set on the ride to find out more about consumer behavior. The consumer is said to be at a state of indifference to two or more baskets that are indicated by plotting points on the curve.
By whatever we studied so far, we have an idea that a purchaser can prefer one market basket over another or stays indifferent to the both. This knowledge can be utilized to rank all imaginable choices of consumption. Let us try to indicate this information graphically. Let us consider clothing C and food items F are available for consumers.
So, the corresponding market baskets explain the inclusion of clothing and food that a consumer wishes to purchase. Suppose we have of some baskets that contain variety of clothing and food. The number of food units purchased on a weekly basis is indicated by the horizontal axis, while the clothing units purchased on a weekly basis is indicated by the vertical axis.
If the graph is observed carefully, we will notice that the market basket A, having 20 food units and 30 clothing units are preferred over market basket G. The reason can be understood very easily if we recall the third assumption more is satisfactory than less. Market basket A has more clothing and food. In a similar manner, the market basket E, is in turn preferred over market basket A. The reason is again the same.
This way, two shaded regions depicting all market baskets can easily be compared because they either contain less or more of food and clothing units. Note carefully that, B has less food but more clothing units and D contains less clothing units but more food as compared to A. This clearly specifies that the purchaser stays indifferent to the three market baskets.
This in other words means that the customer feels neither happy nor sad in obtaining 20 clothing units to giving up 10 food units. Also, the consumer stays unresponsive between points D and A. The purchaser in order to obtain 20 food units will give away 10 clothing. The consumer prefers A more than H that lies below the curve U 1. The indifference curve inclines down from left to right. Had this curve moved upward, it would be a case of violation of the assumptions.
Market basket E is preferred over market basket A, because E has more food and clothing units. This indicates that, any market basket that lies overhead and to the right of insignificance curve U 1 is preferred over any market basket on or lower than U 1. An indifference map is a collection of indifference curves. It demonstrates the preferential choices of a consumer. This preference is related to all the necessary arrangements which include clothing and food.
On looking through an indifference map, all of its indifference curves demonstrates the market baskets. As per these baskets, every consumer stays in an average condition. On looking through a graph which shows an indifference map, one can see the presence of three indifference curves which is formed on this map. This indifference curve, which is denoted by U 3, highlights the maximum feeling of satisfaction to the consumers. This curve U 3 is again followed by U 1 indifference curve and U 2 indifference curve.
Let us see if the indifference curves in an indifference map can intersect or not. For a moment, let us assume that the curves do intersect. Let us assume that there are two indifference curves. We named the first curve as U 1 and the name of the second curve beU 2. Both these curves are intersecting at a certain point A.
In this case, the purchaser must be indifferent between the two different market baskets. Now, on the same lines, we find point A and point D lie on U 2 indifference curve. As per this finding the consumer is unresponsive between these two point D and point A market baskets as well.
By using the transitivity assumption, we may accept the fact that the consumer is indifferent between both point B and point D as well. However, in reality this assumption is not valid. The preference of market basket B is a must over market basket D as it has more units of clothing and required food. This clearly indicates that within one indifference map, indifference curves cannot be intersected. There can be presence of countless non-intersecting indifference curves. And it is also true that every potential market basket do have one indifference curve that passes through it.
We have already seen that the curve slope of indifference curves is towards downward. In the example that we are taking everywhere, whenever there is an increase in the food unit along the indifference curve, there happens a decrease in the clothing units.
However, in a certain case, if one indifference curve inclines upward, it clearly indicates that a consumer remain indifferent. This un concerning attitude is between two different market baskets. Also, this indifference is despite of the fact, that one market basket has more of clothing units and food units than the other one. As we have studied in an earlier chapter, there occurs a situation if trade-offs.
The indication of the exact shape that can be seen in the indifference curve states the willingness that a consumer has over a certain good. As per it, a consumer is an eager participant who can easily substitute one of the commodities with other.
In a certain graphical depiction 2market baskets are mentioned. One is named as A and the other market basket named as B. Now, we can see that a certain consumer is ready to give away 6 clothing units for 1 extra food unit. However, when he or she moves from market basket B to market basket D, the willingness changes to give away only 4 clothing units to obtain the same 1 food unit. Further when the consumer moves from market basket D to market basket E, the willingness constricts to 2 clothing units for 1 food unit.
It was then clearly noticed that a person who possessed more clothes consumed less food. Similarly, when that same consumer gave away more of his or her clothing, that person could acquire more food. So, standing on the same lines, it became clear that the more food a person has, the less is the clothing that he or she will require. That consumer will give away his or her excess clothing to have more food in stock. The Marginal Rate of Substitution MRS signifies the quantity of one item that a certain consumer is ready to gives away in order to acquire another item at a larger quantity.
Therefore, the marginal rate of substitution of food unit denoted by F is against the clothing unit denoted by C.
This clearly means the maximum of cloth quantity one consumer is comfortable to give away for an additional food unit. If the MRS comes out to be 4, it indicates that the purchaser prefers 1 unit of food over 4 clothing units. Thus, MRS can be stated as the measurement of a certain value that a consumer or purchaser can places on an extra item unit in lieu of another.
Let us consider a figure where the clothing units are represented on the x axis whereas the food units are represented on the y axis. While denoting MRS, we should have a clear concept which items we are ready to give away to acquire other item in more quantity. In this example, the vertical axis or the clothing units denote the units which one consumer is ready to leave for the other item. On the other hand, the y axis or the food units denote the units that a purchaser wishes to have more and more.
In order to make the MRS sign positive, there is an inclusion on negative sign. The MRS thus, in terms of its magnitude, is equal to the indifference curve slope.
For instance, the MRS between the two different points is 6. It is between A and B. This clearly indicates the compliance of that consumer to part with his or her 6 clothing units to have 1 additional food unit.
In another figure, the MRS tends to fall as we decline towards the indifference curve. This decline signifies important characteristics of consumer penchants. In order to completely understand this aspect, we will include an assumption to the earlier list of three assumptions. This assumption is written below. Diminishing the marginal substitution rate — Indifference curves are bowed inwards. That is why, they are referred to as convex. In the same figure used in convexity, if we start from market basket which is named as A and move on to market basket B.
However, if we start with market basket named B and move to market basket named D, we can find MRS to be only 4. As the quantity of food consumptions increase, the angle of the indifference curves sees a decline in its magnitude. Consequently, the MRS too declines. Thus indifference curves are necessarily convex. When more of the items are consumed, a consumer will be willing to give away less units of the second item to acquire more units of the previous one.
On proceeding with the indifference curve, we will observe that, the intake of food unit has increased, consequently, leading to higher consumer satisfaction that the person has by seeing more food will decrease. Thus the consumer will tend to give away less and less units of clothing. One thing that is good to note is that the consumers prefer market baskets which is perfectly balanced over those that contain abundance of one item and none of the other item.
Market basket D is relatively balanced to have 3 food units and 6 clothing units. On the other hand, the market basket A is an unbalanced one, having 1 food unit and 16 clothing units. A different curve shape indicates an unalike willingness for the substitute.
Let us analyze a graph and consider two examples to understand this. In a certain figure, it shows how Bob prefers for apple and orange juices. Since, Bob remains indifferent between the two drinks; they are the examples of perfect substitutes. The MRS is 1 in case of apple juice over orange juice. Bob is ready to substitute a glass of apple juice over a glass of orange juice. Two items are said to be the perfect alternatives when there is a constant MRS of one item with the other.
Indifference curves that signify the substitution between items are in fact not curved, but straight lines. Also, it is not necessary for a perfectly substituted indifference curve to have the slope as If a graph is plotted with 16 MB SD cards on the vertical axis, then, the inclination will be -2 in the indifference curve.
Now the same graph depicts another situation where Jane prefers left shoes over right shoes. In this example, the two items are a perfect complement of each other because the purpose of one will remain incomplete without another. Since, Jane is not ready to part with any of her shoes for any other; the MRS for this case is 0.
So, the shapes of indifference curves are two right angles. So far, we discussed all the cases which have advantages. These are all the cases where more quantity of an item is preferred over another which is less. However, there are some disadvantages or bad things as well. These are the things where less is preferred over more.
With this consideration, all the four fundamental assumptions that we considered for the formulation of consumer paragon stay valid. It is not always necessary to have a numerical satisfaction level to each market basket. The curve indicates that the market basket A or for another market basket on the indifference curve U 3 provides a feeling of higher satisfaction rate than any other market basket U 2.
Consumer paragons are built on the assumptions that consumers provide ranks to the respective market baskets. Quite times, it is also beneficial to allocate numerical standards to separate baskets. This leads us to explain consumer preferences by providing numerical scores to each level of satisfaction linked with all indifference curves.
This technique is called utility. Utility is used by consumers to possess items that give them a feeling of satisfaction and not those that give them a sense of pain. Utility thus, simplifies the rankings of market baskets. It is a specific formula linking to a certain utility level of each individual market basket.
For example, let us consider a case, where C denotes clothing and F denotes the utility function for food. Utility function is u. However, any one of the two discussed market baskets is preferred over a third market having 4 food units and 4 clothing units. The market basket named A can be seen positioned on the highest level of 3 indifference curves denoted b U 3.
Its utility level may be 3. But in case of market basket B,it is positioned on indifference curve U 2. The utility level may be 2, on the indifference curve U 1. The utility level of market basket D is 1. This means, that, both indifference map and utility function solves the same purpose.
This indicates that the satisfaction level is the product of C clothing units and F food units. The indifference curves linked with these functions is shown in the figure.
The indifference curves linked with the utility function FC and 4FC differ by numbers not by 25, 50 and but by , and Utility function, thus, is a way to rank different market baskets. No information can be obtained by the magnitude of two market baskets and their utility difference. The only thing that we know is that the measurement of utility is depicted by indifference curves. But we are unaware how much of one item is preferred over another.
This is why the utility function generating a ranking of the market baskets is termed as ordinal utility function. Rankings which are linked with ordinal utility function and which positions market baskets in order of their preference, they start from most preferred to the ones which are least preferred. There is catch in this ordinal utility function. Who will be happier to get the textbook? This is uncertain, as the numerical values are random and hence to carry out this comparison is not possible.
The economists worldwide earlier believed that in terms of basic unit individual preferences is possible to be measured. And therefore, providing a ranking for interpersonal comparisons is possible.
This would straight away mean that Jane receives two times as much satisfactory result as Bob. But, the numerical values which are assigned to the market baskets in this manner actually have no meaning, and gives rise to the cardinal ranking. Cardinal utility is a measurement of the utility function that determines the preference one market basket and by how much is it desired over another.
The important thing that one should know is how a consumer ranks the different market baskets. So, the major work revolves around ordinal utility functions. Whatever discussion we made so far is on the very principal element of consumer paragon, which are the preferences of buyers.
Consumer Preferences, Budget Constraints, Consumer Choice, Corner Solutions, Revealed Preference, Consumer Choice and Marginal Utility and Cost-of-Living Indexes.
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Theory of Consumer Behavior Assignment and Online Homework Help Theory of Consumer Behavior Assignment Help DEFINITION The research of how individuals choose exactly. Consumer Behavior Questions and Answers - Discover the ct4uc3541.cf community of teachers, mentors and students just like you that can answer any question you might have on Consumer Behavior.