The Consumption Of Two Goods

As a consumer, the major aim is to maximize utility at the highest level possible. However, this goal is normally pursued hand in hand with another goal of cost minimization. Consumer wants to achieve the highest satisfaction but in the lowest cost possible. Due to this reason, consumers therefore, tends to try their level best in various ways to minimize the total cost incurred in taking a product from the producer to final consumption. Apart from the cost of the product, there are other costs accompanied in taking the product for final consumption and this can be none other than the distribution expenses (Updike, 2011). This paper therefore tends to discuss this concept by describing the path a product takes to reach the final consumer in two different countries.

How will a consumer decide whether to purchase a good? When a consumer purchases a good, what does this reveal?

Consumers are the centre of many marketers work. While the consumer is part of the marketing environment, it is also very important to recognise and understand the more personal and specific influences effecting consumers and the nature of the decision making process they use.

These research topics on consumers buying decision making is one of the most interesting topics by different researcher and marketer before, and even still there are research going on it. Different researcher has shown different cause which related to consumers buying decision making that 's why

When a consumer walks into a store they know what products they want to buy,

Consumer Surplus is the difference between what the consumer is willing to pay and the price they actually have to pay.

When a consumer walks into a store, they know what products they want to buy, whether it be an item that is a needed or a product that is just a want. If

Straight line indifference curves would indicate that Bob is willing to trade one good for another. This is an example of two items being perfect substitutes of each other. Example might be Bob is willing to only trade 1 Coke for 1 Pepsi because he views both tastes the same. Bob would not trade 2 Cokes for 1 Pepsi. Another example might be Bob is willing to trade a coupon for two dollars off at McDonalds for a coupon for one dollar off at Burger King and a coupon for one dollar off at Wendy’s. Bob is impartial to all three restaurants, so in this example, bob’s willingness will be one $2-dollar coupon for two $1-dollar coupons.

In the modern economic system presented in the world today, microeconomics, and the study of such, is a vital part of the budding economic scholar. In most circumstances, microeconomics is based on the cumulative study of how individuals and firms, or a combination of the two, make decisions regarding the allocation of resources, typically in markets where goods and services are bought and sold. This allocation, or optimization of limited funds through distribution, usually follows 2 standardized theories: the Consumer and Producer. Consumers usually choose to maximize their available preference in the market, with a limited income value or time aspect. This is evident in the world economy, with consumers always being fiscally motivated

Everyday, every minute, and every second consumers are making decisions on whether or not they should purchase a given product. The product could be as small as a candy bar to as big as a car. The processes that flow inside the mind of a consumer when making a decision is both psychologically and economically based. So, understanding the process is central to making rationally based decisions. However, this decision is not only important to the consumer purchasing the product, it’s also of important significance to the marketers and policy makers. Reasons why making decisions can be so difficult is that the consumer is dealt with many alternatives, and with the rapid pace in technology this is making it more difficult.

Mr. Paul Samuelson introduced the Revealed Preference Theory to explain the consumer behavior. It is a method of analyzing choices of consumers, mostly used for comparing the influence of policies on consumer behavior. The preferences of consumers can be revealed by their purchasing habits. Revealed preference theory emerged because existing theories of consumer demand were based on a diminishing marginal rate of substitution (MRS). This diminishing MRS relied on the assumption that consumers always decide to maximize their utility. While utility maximization was not a controversial assumption, the underlying utility functions could not be measured with great certainty. Revealed preference theory

Consumerism is a description of society’s lifestyle in which many people embrace to achieve their goals by acquiring goods that they clearly do not need (Stearns, 7). The idea that the market is shaped by the choice of the consumers’ needs and wants can be defined as a consumer sovereignty (Goodwin, Nelson, Ackerman, Weisskopf, 2). This belief is based on the assumption that the consumer knows what it wants. Contrary to this logic, marketers convince us that the consumer does not know what they want. The consumer has to be told what they want or be persuaded by advertising items in a matter that demonstrates the reason a product makes their life easier or will improve their life instantly. As one of the most successful entrepreneurs,

Marginal Utility by definition is the additional satisfaction a consumer gains from consuming one more unit of a good or service, which is usually positive, but can be negative. The concept implies that the utility or benefit to a consumer of an additional unit of a product is inversely related to the number of units of that product he already owns. The notion of marginal utility originated with attempts by 19th-century economists to examine and describe the economic validity of price. They believed price was partially determined by a commodity’s utility, which led to a paradox when applied to predominant price associations. This problem, commonly referred to as the

Consumers base and make their decisions on expected results. One theory states that consumers are seen as rational individuals who have the ability of estimating the results of different decisions made and thereby selecting the most lucrative one. This theory is known as utility theory. Though consumers are comparatively good at approximating the results of an occurrence, not all consumers are completely coherent, dependable or aware of all aspects in the decision-making process. For this reason, the utility theory has been criticized, but despite its insufficiency, the theory is still well thought-out as a main case in the concerns of decision-making. A new and simpler theory called satisficing had a different approach, instead of, as the utility theory, finding the best result, this theory allows the consumer choose what satisfies his/her needs and then stops the decision making process. An example of this could be the process of finding a house. A more psychological approach has been used in the research of consumer decision-making. This involves the development of prospect theory which has extended the two existing theories and has incorporated psychological factors by adding worth and endowment (Richarme, 2001).

Once there is the decision to consume or purchase good s or services the common factor then becomes the need for that product which is at times evaluated based on attainability and price. In many situations if consumers are not motivated by the need to purchase then the possibility lies that they will not purchase. There may be different justifications that consumers internalize when making the decision to purchase a particular product at its given price. Different decisions supports the need to purchase a product such as