Consumer Behavior Quiz

Equi-Marginal Utility refers to the principle that consumers allocate their expenditures in such a way that the ratio of the marginal utility to price is equal for all goods. It helps in maximizing total utility and achieving consumer equilibrium by guiding the allocation of income among different goods and services.

The types of goods discussed are Normal, Inferior, and Giffen Goods. Normal goods are those for which demand increases as consumer income rises, while inferior goods are those for which demand decreases as consumer income rises. Giffen goods are rare and exhibit upward sloping demand curves, leading to unique impacts on consumer decision-making.

Indifference Curve represents different combinations of two goods that provide the same level of satisfaction to the consumer. Its key properties include being downward sloping, convex to the origin, and cannot intersect each other, reflecting consumer preferences and choices.

<p>Price Effect refers to the change in quantity demanded due to a change in the price of a good, while Income Effect refers to the change in quantity demanded due to a change in consumer income. Substitution Effect refers to the change in quantity demanded due to the change in the relative prices of goods. These effects influence consumer choices by impacting the affordability and preferences for goods and services.</p> Signup and view all the answers

<p>Understanding consumer behavior is crucial for businesses as it helps in designing effective marketing strategies, developing products and services that meet customer needs, and optimizing pricing and distribution. It impacts various aspects of business operations such as sales forecasting, product development, market segmentation, and customer relationship management.</p> Signup and view all the answers