Consumer Behavior in Microeconomics

Introduction

• Welcome by Sakshi Vishnoi, part of Magnet Rains
• Provision of free videos up to 12th grade across all subjects
• Starting Chapter 2 of Microeconomics: "Consumer Behavior"

Who is a Consumer?

• Consumer: An individual needing goods/services to satisfy wants
• Examples of wants: dress, watch, shoes, mobile
• Consumer goes to the market to purchase these items to satisfy their wants
• Satisfaction achieved once the wants are met
• Essential commodities like food are bought to satisfy basic needs (e.g., hunger)

Importance of a Consumer

• Consumers create demand for various products
• Not just one kind of product, but a diverse range (e.g., dress, watch, mobile, bike)
• Economies cater to multiple wants due to diverse consumer demands
• Example differentiation: Consumer C demands rice, Consumer B demands both wheat and rice
• Different products create diverse demands and production requirements
• Importance of diversifying services like banking and insurance
  • Banking: keeping money safe
  • Insurance: providing financial support in case of life/health issues

Consumer Behavior

• Explanation of consumer behavior: how consumers act and react to different needs and situations
• Example given: allocating income of ₹2000 among various activities like party, movie, trip, clothes, and food
• Decisions made based on priority and necessity

Studying Consumer Behavior

• Consumer behavior needs to be studied to understand how they react and utilize their income
• Two approaches to study consumer behavior:
  1. Cardinality Utility Approach: Expressing consumer behavior in numerical terms
     • Including the Law of Diminishing Marginal Utility
  2. Ordinality Utility Approach: Based on preferences rather than numbers (expressed in preferences)
     • Using Indifference Curves to understand utility and satisfaction

Upcoming Topics

• Detailed study on the Law of Diminishing Marginal Utility
• Explanation of utility (satisfaction) in upcoming lectures
• Understanding of both Cardinality and Ordinality Utility Approaches

Summary

• Brief overview: Consumer behavior, importance of consumers, and methods to study consumer behavior
• Next topics include Cardinality Utility Approach and Ordinality Utility Approach in detail