Consumer theory

Abstract: The purpose of the study is to examine the factors that affecting the purchasing behavior of a consumer. 1. Introduction: Consumer goods are products that are purchased for final consumption by the average consumer. It can be called as finished goods; consumer goods are the end result of production and manufacturing. Cosmetic products are also one kind of consumer goods. Cosmetic products are defined as any substances or preparations that are intended to be placed in…

How can we be successful? How can we increase our success to the point where our lives are easier? When do we start being successful in life? Where do we actually begin to become successful in life? To start off as a successful person we got to at least know what we’re gonna do in life. Well let’s start off from the top, we gotta at least know what career we really want. Then from going down to choosing our university or what college to go to. Then when to register for our university or college…

Porter describes the customer as the buyer, specifically the buyers in markets of output where firms sell goods and services. Sometimes there are situations when the customer is positioned in a way that the firm can be pressured to make decisions that adversely affect profitability. These situations revolve around two areas called buyer’s price sensitivity and the related bargaining power. The buyer’s price sensitivity is defined in four factors that shift the power back and forth between…

The Cross-Price Elasticity of Demand measures the rate of response of quantity demanded of one good, due to a price change of another good. If two goods are substitutes, we should expect to see consumers purchase more of one good when the price of its substitute increases. Last September, CVS was the 1st major pharmacy chain in America to stop selling tobacco products in their stores. While the prescription sales at CVS continue to rise, the general merchandise that they sell fell nearly 8% last…

(Heakel, 2015). Elasticity is measured by dividing the percentage of change of quantity by the percentage of change in price (Colander, 2013). The Law of Demand says that when the price of a good increases, the quantity decreases. In that instance, consumers will search for a substitute for that good. A substitute is a good that can be used as an alternative to a previously purchased good that has undergone a significant price increase (Colander, 2013). A firm 's ability to produce a…

products, but instead they change share earnings and marketing schemes, or forfeit altogether. Price elasticity of demand can also be related back to consumer surplus. If demand were to stay the same, even a slight decrease or increase in the price at which a good is sold would significantly impact consumer surplus. Decreasing the price would increase consumer surplus, but it would also decrease producer surplus (proving price decreases to be inefficient for producers, especially at a time where…

Freakonomics can be seen as the study of economics based on the principle of incentives. In the movie, Steven Levitt and Stephen Dubner gives multiple examples of how incentives govern our thoughts and actions and its role in economics. The first example explored was the unlikeliness of a house agent to wait to sell a client house for a higher price. The simple reason is the low incentive. If the agent was to wait another week to sell the house for a price that is only 10k higher, they would get…

2.3. ECONOMICS INVOLVED (a) (b) (c) FIGURE 2.6. (a) Demand Relationship (b) Supply Relationship (c) Demand and Supply Relationship Therefore, it can be said that price is the reflection of demand and supply. It is believed that behind the allocation of various resources underlies the relationship between these two (demand and supply). For example, if there is a shortage of oranges in the market, their price would increase. This reason behind this is the reduced supply and increased demand for…

effects: it is a situation whereby if there is an increase in price or decrease in income, consumers will substitute high-priced items with less expensive alternatives. Substitution effects shows the change in the consumption of goods due to the change in the prices of the products. Consumers tends to replace/substitute luxury goods with cheaper items when income decreases or price rises. However, the consumers also tend to substitute cheaper items with luxury goods when their income increases…

can be expressed as € PS = 0.2 + 0.0003Q. a) What is the price and quantity at which the market clears? The price and quantity at which the market clears is $3.50 and 11,000 respectively. b) What is the value of the consumer surplus and the producer surplus in this market? The consumer and producer surplus are $6,050 and $18,150 respectively. The overall benefit to society from producing and consuming candy bars is $24,200. c) Imagine that a new factory opened up which could make the item much…