Consumer Behavior
Production of goods or services and the consumption of goods or services are two basic economic activities. Peoples work and produce only in order to obtain goods and services to consume. Consumption is the ultimate objective of economic activity. Consumption means the use of goods or services for direct satisfaction. Everybody purchases different kinds of goods or services from market on pay. The activity which shows the nature of the peoples to consume or purchase is called consumer behavior or the behavior of the people with regard to selection, purchase and consumption of goods and services for satisfaction of their wants is known as consumer's behavior.
Utility
The power of a commodity or service to satisfy human wants is called utility or the basis on which the demand of an individual for a commodity depends. Thus utility is the satisfaction which is derived by the consumer by consuming the goods. For example, Water has a utility for us because we can drink it. Computer has a utility for a person who can work on it. The utility of every person is different from another person in every aspect of life. The utility of smoker for cigarette very high very but for non-smoker the utility is zero. Hence it may be said that the term 'utility' may not be confused with pleasure which a commodity gives to an individual, utility is subjective in nature the satisfaction which the consumer gains from consuming any good or service.
Characteristics of Utility
1) The utility of any good for any person is not constant. It may change due to many factors. Such as taste, trend, or fashion etc.
2) There are no units to measure utility of a person for specific good. For example we cannot measure the thirst of a person for water nor measure the utility take from one glass of water.
3) The utility depends upon human wants. For example if a person has strong desire for mutton or beef the utility will be greater, but the utility of vegetarian person will be zero.
4) Utility depends on time and place for example, the utility of ice-cream increases in summer and the utility of coffee increases in winter so it depends on time and place.
5) Utility is different from usefulness. For example if a person has utility for drugs, so drug is not useful for his health.
6) The consumer is rational he seeks to maximize satisfaction from the limited income which is at his disposal. For example if a person has hundred dollars and he want to buy a smart phone. so he will buy the smart phone which are under or equal to hundred dollars in price.
Cardinal Utility
Human wants are unlimited and they are of dissimilar intensity. That’s means the disposal of a man are not only scarce but they have alternative uses. As a result of scarcity of resources, the consumer can not satisfy all his wants. He has to select as to which need is to be fulfil first and which later if the resources permit. The consumer is confronted in making a choice. For example, a thirsty man satisfies his thirst by purchasing cold drink instead of coffee or tea. The consumer buys a particular commodity because it has utility for him and it gives him satisfaction.
Total Utility
Total utility is the total fulfilment get from all units of a certain commodity consumed over a specific period of time. For example, a person consumes three glass of orange juice and gains total utility. This total utility is the sum of utilities from the first glass of orange juice to third glass of orange juice. Hence total utility is the amount of satisfaction obtained from consuming a particular quantity of a good or service within a specific period of time.
Marginal Utility
The change in total utility due to the consumption of a specific good increased by one or more units is called Marginal utility or Marginal utility is the change in total utility that results from specific amount of change in consumption of the commodity within a specific period of time. Marginal utility is the additional units of utility which a person consumed with in a given period of time. For example if a person eats two mangos the marginal utility is 1 it is 0 when he eats the third mango.
Zero Utility
The consumption of no further desire for the commodity is called zero utility. If a person is fully satisfied he eats three mangoes but no more desire for the forth mango.